Definition - What does Headphone Virtualization mean?
Headphone virtualization is a sound processing technique in which a surround sound experience is delivered on standard stereo headphones through embedded digital signal processing (DSP)-based chips or sound cards. It is enabled through the operating system (OS) or sound card firmware/driver.
Headphone virtualization was first made available in Windows Vista.
Techopedia explains Headphone Virtualization
Headphone virtualization allows a two-channel headphone to provide Dolby 5.1 or higher sound performance. It is built on the principles of head-related transfer functions (HRTF) technology, which uses the structural design of a human head to transmit different sound cues.
Unlike typical headphones, which transmit sound directly inside the ears, headphone virtualization delivers sound outside or around the head's listening experience. A user may easily differentiate between sound that emerges from left to right, right to left or center to bottom, etc.