A number of the responses got it correct... It is a function of wave theory and the fact that what you hear is not a single wave. It is the complex interactions of 2 sets of waves arriving at different times to each of your 2 ears. Right and left speakers waves (actually oversimplified since most speakers have multiple drivers) interact with each other.
The behavior of waves; interference patterns, comb filtering, nodes/anti-nodes, etc. impact the sound level and timing that each of your ears perceives. Your brain then "steers" your perception of where the sound appears to have originated. Functionally, light and sound waves behave similarly so if you want a visual, google light interference pictures. The most extreme example of this effect is with noise cancellation headphones which creates a perfectly out of phase sound to the actual noise and the two waves completely cancel each other out.
The degree of sensitivity to timing delays between your ears becomes evident when you are swimming under water. Because of the density of water being greater, the speed of sound increases and therefore the delay between your two ears becomes shorter. As a result, human beings more or less can not decipher directional clues from sound underwater... Gives us a few million years under water to evolve and we would likely "recalibrate" and be able to decipher those clues. Dolphins, wales, and all other sea mammals have similar ears to humans and other land mammals but they all relay on echo location to "see" more than eyes.
In summary, if a louder sound wave originates from the left speaker and a softer identical, but out of phase, wave originates from the right speaker, our brain will interpret these waves as if the sound was originating from outside left of the left speaker. As one respondent correctly states, Q sound accurately maps these interactions and sound engineers can actually steer the sound not only to either side of the speakers, but even around your head. For this effect to be completely realized, you must be sitting in the "sweet spot", equal distance from the two speaker... and of course above water level...
The behavior of waves; interference patterns, comb filtering, nodes/anti-nodes, etc. impact the sound level and timing that each of your ears perceives. Your brain then "steers" your perception of where the sound appears to have originated. Functionally, light and sound waves behave similarly so if you want a visual, google light interference pictures. The most extreme example of this effect is with noise cancellation headphones which creates a perfectly out of phase sound to the actual noise and the two waves completely cancel each other out.
The degree of sensitivity to timing delays between your ears becomes evident when you are swimming under water. Because of the density of water being greater, the speed of sound increases and therefore the delay between your two ears becomes shorter. As a result, human beings more or less can not decipher directional clues from sound underwater... Gives us a few million years under water to evolve and we would likely "recalibrate" and be able to decipher those clues. Dolphins, wales, and all other sea mammals have similar ears to humans and other land mammals but they all relay on echo location to "see" more than eyes.
In summary, if a louder sound wave originates from the left speaker and a softer identical, but out of phase, wave originates from the right speaker, our brain will interpret these waves as if the sound was originating from outside left of the left speaker. As one respondent correctly states, Q sound accurately maps these interactions and sound engineers can actually steer the sound not only to either side of the speakers, but even around your head. For this effect to be completely realized, you must be sitting in the "sweet spot", equal distance from the two speaker... and of course above water level...