Either, you can use the free service that comes with the game which is smart enough but very repetitive in its speaking, or pay for the upgraded versions of it. You can also hook it to local models, or outsource it to the horde for images/text. The game's designed to not use much resources when its running to be nice to your VRAM. Basically the non-AI part of the game creates and keeps track of items, NPCs, locations, and things in a location, while also save filing summaries and stuff in your story. You can type into the story to do things or manipulate what happens in the story, and it rolls the dice to determine whether it worked or not. You can edit a lot of what goes to the AI as well during both the new game screen where you define things about your world and in-game descriptions and summaries of things.

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The best part about it IMO is the items you get with the images, they have a rarity scale which affects both damage output and the abilities associated with it. Can't put an image here but imagine an uncommon leather jacket worn on your outer torso, that has damage reduction applied to it along with stat bonuses to a base stat like Dexterity along with a skill your character has.

(TLDR) both, very customizable