The positional audio is really only coming from two or four actual transducers - dual or quad speakers, or the twin transducers in headphones. The theory behind HRTFs is, in essence, pretty simple. Fake enough of those tell-tale distortions, and you fake the location information too. Actually doing it, of course, is a heck of a lot more complicated than the basic idea. With headphones, it can be spookily good.
Environmental audio is, usually, simpler.
It's the simulation of what sounds do in particular spaces. It's supported in DVD only by discs with an MPEG-2 soundtrack, and even then is very rare. Which is just as well, because practically nobody has an audio-visual setup that can play it. In 5.1 channel mode at 384 kBps, AC-3 uses 64kBps, but its superior sound quality at a given bit rate makes it about as good as CD for even critical listening. The AC-3 standard actually technically supports bit rates up to 640 kBps, but the implementation of it used in DVD doesn't.