Under optimal conditions, humans can, even with their eyes closed, localize the direction of sound sources to an accuracy of a few degrees. That is not a trivial feat. Just try to imagine you had to work out the location of all the boats, fish, swimmers, etc, swimming about in Sydney harbour purely by analysing the pattern of waves and ripples on the surface of that waterway. That would be difficult enough to do if you can observe the waves across the whole body of water, but of course your auditory brain solves a similar feat by observing the waves at only two points in space: your two ears. Chapter 5 of "Auditory Neuroscience" discusses spatial hearing, the cues that we use to localize sound sources, and the neural mechanisms involved in processing this information. The following web pages provide additional material to further explore this topic.