Acoustic design of concert halls has shown that a "good" hall generates for the audience a sound field with three distinct facets. To create a convincing illusion in your living room, an audio system must be able to reproduce all three facets.
One facet of the sound field is the direct sound that travels from the musicians to the listener - stereo can be good at reproducing this (as long as the musicians are placed between the speakers). Another facet is the reverberation, not perceived as originating from any particular direction - Dolby Surround and Pro Logic can be good at reproducing this. The third facet is discrete reflections, also called lateral reflections - reproducing this facet is much more challenging.
Discrete reflections travel from the musicians to the listener via the floor, ceiling or a wall; some travel via two or three reflections. Discrete reflections can arrive at the listemer from any direction. Those that arrive within about 30 ms of the direct sound are not perceived as separate sounds but, instead, provide the listener with a sense of "space". Those that arrive after about 30 ms are perceived as echos and provide the listener with a sense of "envelopment".
Because discrete reflections can arrive from any direction, to reproduce them a surround sound system must be able to reproduce sounds from every direction. Given a limited number of speakers, what separates the surround sound wheat from the chaff is the ability to reproduce sounds from between the speakers. This is not, as many think, determined by the channel separation, but by the mixing style.
Only Ambisonic Surround Sound is able to reproduce a complete seamless (360-degree horizontal or full-sphere) sound field. Ambisonics does not create the illusion of musicians playing in your living room, but instead transports you to the concert hall. Your living room sounds suddenly ten times larger; the effect is not subtle and is completely captivating.
Obviously, a surround sound system that can reproduce sounds from any direction, and with a sense of "space" and "envelopment", is not limited to concert hall recordings. Ambisonic Surround Sound has brought unlimited artistic freedom to audio.