As observers have noted, Ai has been released from custody but he is still under investigation. Technically, the police have changed the coercive measures (强制措施) imposed upon him during their investigation from "residential surveillance" (监视居住) to something called 取保候审.
What is 取保候审 and how should we understand it? Well, first of all, 取保候审 in pinyin is qubao houshen, but if you're unfamiliar with Chinese characters you probably can't read pinyin, either. So, I'm going to stick with characters.
Professor Jerome Cohen has posted an insightful response to Ai's release on the blog of the US-Asia Law Institute that explains 取保候审, from the perspective of both procedural law and pragmatic usage. He writes:
The analysis is excellent, and I recommend reading it in full. My only quibble (and the reason I'm posting) is the decision to translate 取保候审 as "obtaining a guarantee pending trial." I think that understanding 候审 as "pending trial" here obscures more than it elucidates. Why? Well, Professor Cohen points to the answer himself when he writes:
Qubao houshen (QBHS) is a technique that the public security authorities sometimes use as a face-saving device to end controversial cases that are unwise or unnecessary for them to prosecute. Often in such cases a compromise has been reached in negotiation with the suspect, as apparently it has been here. Of course, we will have to hear what Ai says upon release, recognizing that, as part of the agreement and as a consequence of long incommunicado detention, the released suspect is usually subdued in any public remarks made upon release (recall Xu Zhiyong, for example).
Concretely, QBHS usually means that the investigation can continue for up to one year while the suspect is allowed to have freedom of movement, if not freedom of speech, within his city of residence. His travel documents are usually kept by the police and he must seek their permission to travel elsewhere in China and certainly abroad. Often during the subsequent year in such cases, the investigation is quietly dropped so long as the suspect behaves himself in accordance with whatever deal was struck and nothing occurs to mar the agreement.
Under the provisions of the Criminal Procedure Law, 取保候审 may be imposed at any stage of a criminal investigation/prosecution, from first contact by police to final adjudication by a court. In Ai's case, as Professor Cohen rightly notes, the measure has been taken against him prior to the stage of formal arrest. Since the case hasn't even been submitted to the procuratorate for indictment, how can there be a "pending trial"?
It is important to remember that, although the announcement claims Ai has “confessed his crimes”, no formal charge has ever been made against him; he was apparently not even formally arrested” (逮捕), not to mention indicted (起诉). Ai has thus not had to plead guilty to any crimes, although the term “renzui” (认罪), or admitting guilt, has been used in the press report. He can end the tax obligations by payment with interest, and perhaps a fine, as the press report says he is willing to do.
Instead, I always translate 候审 as "pending further investigation," reading 审 here as 审查, or "investigation," rather than 审理, which I would translate functionally as "examination through trial." The use of the somewhat vague "investigation" mirrors the ambiguity of "审" and allows it to refer broadly to any of the investigative stages during the criminal process.
That's it, a perhaps pedantic tangent to the main story here. In short, I humbly propose a new translation for 取保候审 as "obtaining a guarantee pending further investigation." There's a history of established usage to overcome, but I think the change is necessary.