[Philip Lelyveld comment: This 3 1/2 minute video by Texas Instruments clearly and concisely explains the three components of their 3D audio technology; beam steering, crosstalk cancellation, and head related transfer function (HRTF or the psychoacoustic effect).]
[National Semiconductor website]
Watch the video here: http://www.national.com/en/videos/spatial_audio_technology_overview.html