Why virtualization for headphone applications?
Well, listening with headphones is an unnatural condition. Because of evolution, humans hear spatially, this is fixed in our genes. This is not possible with headphones because the way a room reflects an audio source is not available. Indeed, headphones bring audio signals directly into our ears without any spatial information of the current room environment. Naturally, our brain recognizes this unnatural audio reproduction and tries to compensate. Finally, we adapt and don’t hear the discrepancy any more, but our brain does it subconsciously.
Virtualization simulates neutral hearing. So, e.g. the left and right signal of a stereo mp3 will be adjusted separately for each ear like it would on a stereo system in a living room at home. In this way, our brain gets natural sounding audio information which prevents limiting effects and gives the possibility to put virtual speakers at nearly any place around the listener. So, stereo, 5.1 surround and future 3D mixes can be reproduced in a way that is impressively realistic, as one would hear it on a corresponding real speaker system.