I believe that new AIs in LFS are implemented using some machine learning algorithms, but don't quote me on that. There were attempts to decode the AI path files, but no one succeeded so far and devs are quite silent about their inner workings. We don't really know how they work at all.
What I saw is that once you start racing against them, they do get slightly better, but only by a small margin. This is still nothing close to racing against humans, but it does provide some sort of single-player fun. To add "spacial awareness" to AI is probably the task that needs scientific research, I mean this is an extremely complex topic and one can do many implementations from simple to more advanced. Again, this is something that LFS devs don't have time to work on, so I don't think it will be any better than what we have now.