They either use RSH or RH. They might possibly have TCS maxed so they can conserve tire wear. Of course the CPU could cheat and use RSS's with super long lasting performance!
All Endurance Events, The 1000 Miles Events, The Formula GT Events and quite a few other events (not coming to my mind but some-one else will surely point out), the AI definately pit for Tyres. Their tyres definately wear out. Very easy to see this in any 'Long Race' at the Nurburgring. Reason being that if they accidently miss the pits, their lap times blow out an extra 4 minutes or so.
Have you driven any race outside of the Beginner Hall?
As Open Addict says, try one of the 1000 miles! events (in the European Hall), and you will see the AI begin to pit after about 60 to 70 miles, depending upon the car and the track.
The AI in full-on race cars pit after about 25 to 30 miles, again depending upon the car and the track.