How much reality do you really need?


The real question to the audiophile  is, “how much reality do you need” to enjoy your system? Does it have to be close to an exact match?  How close before your satisfied?  Pursuing that ideal seems to be the ultimate goal of the audiophile.
The element of your imagination has to come into the equation, or you’ll drive yourself mad.  You have to fill in part of the experience with your mind.
But this explains the phenomenon of “upgraditis.”
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This is actually a valid question the OP asks. Years ago, when I had a very different system then I do now, I was listening to the Genesis  Invisible Touch disc. On one of the songs, I could clearly hear for the first time that Phil's vocal was being recorded in a studio isolation booth, and even though that may be a sign of "accurate" reproduction, I found it a little distracting, and it took away some of the magic of the song.
There is no reality. It is all an illusion. You want the most believable illusion you can get or the most accurate interpretation of the artist's and engineer's  intension. The only way you can possibly know how far this goes is to hear it and it is the rare system that performs at this level. 
The money spent has less to do with this level of performance than you would think. I would also guess that most of the people here will know it when they here it. In my aging memory there have been exactly three systems that performed at this level. (that I have heard) One was based on a 4 way dynamic speaker, one on a three way ribbon speaker and the last on ESLs. It is what Harry Pearson called "the absolute sound." 
Looking for it can be an addiction. Gammaman just got a set of Magico S7's from a fellow who really needs to be in rehab. He spends ridiculous amounts of money and spits out equipment at an unbelievable rate. Nice guy to know for sure. Just stand at his front door with a catchers glove. 
I hope he finds what he is looking for. 
I'll worry more about this when I can find a recording in which reality has been preserved. Haven't found one yet, but then that is probably because I've never owned a system which could reveal this recorded perfection anyway (maybe I already own such a recording and just don't recognize it as such!).  I've settled on just having an enjoyable listening experience, one without angst about perfection in the performance, recording, or equipment. :-)
I have one requirement: If it’s on the recording, I want to hear it. Without exaggeration or distortion. Simple.

If a recording needs a playback system in order for you to hear it, and every system is different, how do you *really* ever known what’s on the recording?

I know it's not strictly analogous, but this kind of reminds me of the Heisenberg uncertainty principle.

Only issue I have with the question is the lack of clarity around the word reality. After all, if my room goes from being a silent chamber to being filled with sound, that’s about as real as could be hoped for. Real in the most basic sense of "something" rather than "nothing."

So...reality is.... simulation? Or miniature? Or cameo? Or animation? Or claymation? And once we get the genre of representation settled, we still need the translation formula. Stieglitz did one kind of translation and Monet did another. Which translation is "real"? They all are. Which are best? The million dollar question.

Here are some philosophical options on the "real" and some possible ways they would play out in audio. 
https://plato.stanford.edu/entries/metaphysics/#BeiSucFirCauUncThi
  • “Being is; not-being is not” [Parmenides];
  • That which fills silence is "real."
  • “Essence precedes existence” [Avicenna, paraphrased];
  • What is real is in the source. Everything else takes away from it. Do no harm, is the audiophile prescription.
  • “Existence in reality is greater than existence in the understanding alone” [St Anselm, paraphrased];
  • Subjectively enjoying perfect sound is not as good as subjectively enjoying sound that really is perfect.
  • “Being is the most barren and abstract of all categories” [Hegel, paraphrased];
  • Anything can be; to be something particular (even beautiful) is the proper aspiration.
  • “To be is to be the value of a bound variable” [Quine].
  • Nothing exists outside of some bounded (limited, particularized) instantiation of it. There is no general real, only plural reals.
Ask Lewis Hamilton how much horsepower does he really need? Hey Usain, how much speed do you really need? Excuse me, Mr Honnold, but do you really need to Free Solo? My telepathic powers were employed to reach out to Sir Edmund Hillary. I asked, "How much reality do I really need?" It was a bad connection. His reply was a little hazy. But I could swear he said, "Until it's there."
The ideal system will let you hear the distortion added during the recording and mastering process... free from distortion added by the playback system. So the ideal system only gets you half way there.
Just FYI, "reality" is not really my jam.

I don't like concert like volume in my living room.

I do like space, room acoustics, imaging, and a neutral tonal balance.

I like a room that is well controlled so my brain doesn't have to work hard to ignore the reverb in the room.

Since I don't play at concert levels, but I do like to hear it all one could argue I'm going to get a different tonal balance than recorded.  Fletcher-Munchausen (grin) and all that. :)
How much __________(fill in the blank)  do you need? Its the age old question. A Billionaire needs more $$$. A man with a gorgeous wife cheats on her with a  woman who's looks are nowhere close to looking as good as the wife. A man has a beautiful car which does 0-60 in 4 seconds and top speed of 180+ is out looking for a faster or different car. Familiarity breeds Contempt!! Its the nature of man to want more or different. Why would Hifi be any different?
Depends. It is related to what the system is intended to do. A critical top end system, a music player, or juke box. For my critical listening, I want the full Monty. A system that covers the entire frequency range with perfect tonal balance and deep 3D soundstage.   
I can enjoy most any well done system where noise and distortion are under control.   The rest is icing on the cake and I like the icing!
I have one requirement: If it's on the recording, I want to hear it. Without exaggeration or distortion. Simple.