In terms of sound, not necessarily music, if you're not watching, isn't location mostly determined by the brain ascertaining time differences? An ancient survival skill.
Your ancient survival skill works on spectral content (frequency), time (phase) and amplitude differences.
The ears register a sound. The brain analyses the spectral content and makes a first pass at identifying the source (prey or predator) The sounds reach each ear at a different time (phase) and amplitude. The brain uses this information to locate the approximate position of and distance to the source. The head is then rotated until the phase and amplitude reaching each ear are equal, thereby aligning the focal centre of the eyes with the source, providing a more accurate conformation of identity, position and distance to the source.
Music is sound. Sound with particular frequency spectra and regular (rhythmic) amplitude changes.
Hi-fi uses this natural survival ability by providing 2 dependent sources of sound, thereby manipulating the phase and amplitude of each instrument as it reaches each ear, which your brain then uses to create a sense of where each instrument is placed in the sound stage. All that’s happening in your room is 2 direct sound energy sources and whatever reflections they generate. The soundstage or images are created in your head based on the differentials between the 2 sources. The dimensions, relative focus and specificity of your soundstage and imaging depend on:
a. your system’s ability to preserve and accurately replay the differential signal‘s amplitude, phase and frequency
b. your room’s ability not to interfere with (a) via overly strong reflections and too high a reverberation time.
c. and what’s most important.......what’s on the recording
Ideally a system should allow your brain to create a recording-specific soundstage.....huge and atmospheric for some, pinpoint holographic on others and compressed and congested on a few....all depending on what the sound engineer created...whether naturally recorded or artificially created.