A few things to consider here:
I think you meant frequency and time domain. Amplitude is part of either frequency or time domain.
- You get placement information of instruments via two methods, volume and timing. If the right side is louder for a particular instrument, then that is where you perceive the instrument is coming from. That is the mechanism for placement of sounds that are continuous. The other mechanism is arrival time (between the left and right ear). That is used for transient sounds. A clap will arrive to one ear slightly before the other. Your auditory processing system is able to time that to pretty fine resolution and give you an idea of where it came from. Some posit that arrival time also plays a factor in placement of continuous sounds.
- The electromechanical system only stores and transmits sound waves (pressure variation). It does not transmit instruments, etc. It is your brain, knowing what a grouping of sounds mean, that is able to extract instruments and place them.
I think you meant frequency and time domain. Amplitude is part of either frequency or time domain.