These spatial cues supplied by the pinna to your brain are called HRTFs or Head-Related Transfer Functions. Because they depend on the volume and direction of the sound, the transfer functions of the sound waves from the pinna and ear canal are constantly changing. They change because the sounds they register constantly change. This transferred information gives your brain the necessary details to understand what you are hearing and from which direction you are hearing it. SRS takes into account the constantly changing transfer functions of the human hearing system and restores the proper frequencies and proportions of direct and indirect sound waves so that what the listener hears is closer to the original performance.
Traditional stereo reproduces a flat, two dimensional sound field.
However, when the audio source is recorded, directional audio cues are still present in the recording. These cues such as ambient or reverberant sounds are simply masked in traditional stereo playback. By breaking down the stereo signal into its various signal components, it is possible to isolate and restore these spatial cues, which include ambient sounds, such as crowd noise at a ballgame. SRS technology extracts this information and processes it through a patented frequency response correction curve. This curve restores the appropriate location of the ambient sounds relative to the direct sounds.