Quote:From the standpoint of a dac, the problem is to accurately reproduce lateral and depth localization cues (two different things). Phase coherence between channels needs to be within a few microseconds under all playback conditions, including with both channels playing different musical content. This requirement is for ITD lateral localization as described in the wiki article.
Depth cues mostly consist of direct to reverberant sound ratio, and loss of HF content with distance. This requirement means that very low level musical information such as may be on a well recorded CD, including room reverberations and their decays in the recording space (say, a concert hall) are plainly audible, at least if the volume level is turned up high enough.

For these spatial cues to be well audible also requires that the reproduction space where listening will take place is sufficiently acoustically treated; also the listener should be less than the critical distance from the speakers. Speakers need to be positioned to produce a good stereo image between them. Ideally the sound should not sound like its all coming out of the speakers; rather it should sound like sound also originates in the space between and behind the speakers, and also extending in width laterally beyond beyond the speakers themselves.