The science behind Head Related Transform Functions [0] is fascinating, and includes additional tricks. For example, the shaped fleshy bits of your ears modify incoming sound differently depending on the direction, so that the noise from "up and in front" has a signature which differs from "down and behind". There's also a component that comes from sound traveling through your head, where traveling through the front is different than traveling though the back.
I particularly remember this because long ago I had an Aureal A3D [1] sound-card which made great positional sound (over headphones) by simulating HRTFs and sound-reflection off of game-world geometry. Unfortunately they were sued into bankruptcy by Creative, whose EAX technology was much less-impressive.
[0] https://en.wikipedia.org/wiki/Head-related_transfer_function