To create a convincing illusion in your living room, an audio system must be able to reproduce all three facets. Another facet is the reverberation, not perceived as originating from any particular direction - Dolby Surround and Pro Logic can be good at reproducing this. The third facet is discrete reflections, also called lateral reflections - reproducing this facet is much more challenging.
Discrete reflections can arrive at the listener from any direction.
Because discrete reflections can arrive from any direction, to reproduce them a surround sound system must be able to reproduce sounds from every direction. Given a limited number of speakers, what separates the surround sound wheat from the chaff is the ability to reproduce sounds from between the speakers. This is not, as many think, determined by the channel separation, but by the mixing style. Ambisonics does not create the illusion of musicians playing in your living room, but instead transports you to the concert hall. Ambisonic Surround Sound has brought unlimited artistic freedom to audio.