Psychoacoustics studies the way the brain elaborates sound. A good knowledge of such mechanisms is indispensable in sound engineering, in that it allows, through appropriate manipulation, very sophisticated sound effects to be obtained. One of the most important factors when processing sound, is that the brain elaborates two channels of information simultaneously: those that enter through the left ear, and those through the right ear. It is the (sometimes subtle) differences between these two signals that bring about a new piece of information associated to the composition of the two sound waves. In this case we're talking about stereophonic sound. When, on the other-hand, the two signals reaching ears are exactly the same we call this monophonic sound.
We have seen how when a note is played, it excites the fundamental frequency and all its harmonics, the latter being multiple frequencies of the fundamental [Harmonic content of a waveform ] . The brain is capable of reconstructing the fundamental frequency, even if imperfectly, out of the higher harmonics. To get a better idea let's imagine a little beach radio with its tiny, rough'n'ready loudspeaker, playing the latest summer hit. The latter will be reproduced with a highly reduced frequency band but nevertheless we will be able to hear the bass line thanks to the brain's capacity to reconstruct the fundamental from the information received from its harmonics.
This is the brain's ability to pick up a signal from amid a group of overlapping sounds. Imagine you've gone for dinner at your favourite, crowded restaurant. Regardless of the background buzzing of voices, if you try and listen you can probably pick out and focus on a single conversation taking place at another table. You nosy so and so ;-)