what does "Air or a Halo around instruments" mean?

Abstract7 is right to my mind. If you listen for example to a solo violin or a solo piano very carefully, you will notice, how the tone appears and spreads in the soundspace with its overtones forming a cluster around its tonal core, if you like. If you were to translate this into colour, it would, for example be like a strong red at its central core, which then would spread out, like ripples from a stone thrown into a pond, into different hues of red, getting weaker and weaker in intensity. It is how the tone, or a succession of tones, spead and decay after their first appearance, which is called the halo. If a system reproduces this well, it has , as Abstract has suggested, air. Electrostatics do this quite nicely, though still far from the real thing.

I've found that cables (matched to the system) are really what makes or breaks this effect. I can put a badly matched cable into my system, and instantly it is transformed from 3d to 2d.

Tube equipment is definitely the way to go for a sense of presence or air. You can get a 3d effect from solid state, it just doesn't feel as 'alive'.

When a system is well set up, you can distinctly tell that there are x players in the room, and where each one is sitting & how far apart hey are. You can also tell when one moves their instrument up or down. You can almost feel like you could get up and walk around & behind each individual player.

I don't have the vocabulary to articulate the concept fully, but I will make a suggestion that may be helpful. When we attend a live performance our visual cues often overcome our sonic attentiveness. Try closing your eyes as you lisen to live music and allow yourself to get a "sonic image" of the instruments or voices. Also note the quality of the sound, timbre and pitch, as the instruments (voices) interact with the environment. I have found that using this kind of reference allows me to judge the veracity of an audio system. I agree with the above posts that in my experience tube amplifiers and pre-amps are better able to achieve this sense of dimensionality and space.

Air is the space around individual instruments. When you hear halos I would guess that you are exciting the angels :)

Detlof your explanation is interesting however I always referred to this effect as the natural decay. Sometimes when I listen to this effect and I certainly hear it in spades on some recordings, it appears the decay may be a bit longer than I note with live music as though there is some type of reverberant effect added to the recording. Even a reverberant hall doesn't seem to hang on to notes as long as certain recordings do. At least I can't recall hearing it to the same degree. Live seems a bit faster.

Tubegroover, I quite agree with your point, but found it difficult to differentiate the halo-effect from what is described as natural decay, since the halo will decay together with the tone per se. In a live offering, easily to hear with chamber music in a smallish hall, or with a solo instrument played in an ordinary room, you can easily discern the halo forming around a note played, which can be quite startling, if you've listened to canned music for a long time, because I know of no system, which is able to reproduce this effect properly. It is either missing entirely, or truncated, or as you so rightly suggest, simply too slow. Live certainly is faster, I agree, also more compact as a cluster around the central tone.