The term applies to the functions fulfilled by our two ears (“bi-aural”).
It accordingly calls to mind the natural hearing function of any animal equipped with a two-ears perception system (but then I don’t know if there is such a thing as non-binaural auditory system in the normal-hearing animal kingdom ; my granny couldn’t hear binaurally anymore, but that’s another story).
These days, the word binaural also suggests the three-dimensional space of projection which the listener’s brain synthesizes from the two-channel (left and right) audio data it receives.
Being at the crossroads of 3D audio and natural listening, binaural sound involves specific transfer functions (two ears spaced by a head).
With binaural, as with spaced pair stereo, the localization cues are due to differences in time and intensity, but also to spectral transformations brought about by the listener’s morphology.
The ear shape imprints the sound, thus providing distinctive clues. This function is termed HRTF (head Related Transfer Function).
Since 1930 (Blumlein), binaural also refers to the audio recording and reproduction techniques which emulate natural listening.
My bino is organic
In the world of 3D audio, two complementary approaches stand out : native binaural and binaural synthesis. The former is more or less organic whereas the latter proceeds from a kind of cloning.