When you play back Dolby Atmos material, this feature sort of emulates having a surround sound system. So, even though you only have two earbuds, sounds do seem to be around you (coming from behind etc.) And if you move your head, the sound source stays the same, enhancing the illusion that there are 5 speakers around you and if you move, the sound changes.

The emulation is convincing and well executed, but it is still just a gimmick that only really works when playing back Dolby Atmos movies.