Siggi Odds demonstrates how to create shadows and highlights using Illustrator's Effects.
This image is created using only vectors, gradients and Illustrator's Inner Glow effect.
I initially started using this technique - using only vectors and Illustrator Effects - so I would be able to scale the images to any size. This is very useful when you are making illustrations for something to be used in a broad range of sizes. I have used images made with this technique for everything from web banners to large-scale window decorations.
For some reason, people seem to be afraid of using the Illustrator Effects, but I find it essential when making heavily shaded illustrations to be used in many sizes. Primarily I use the Inner Glow effect to make odd-shaped gradients, which is essential to this style and harder to do otherwise without using Gradient Mesh or taking it into Photoshop. I really enjoy the slick shading the effects make€¦