Dolby Atmos is a Digital Signal Processing (DSP) technique to create a spatial sensation (better direction and depth, like Dolby Surround). It’s actually just another part of the signal chain… you have your source with the music files on it, the player, a DSP (even if the DSP is just equalizing, or doing something more advanced like spatial audio), a Digital to Analog Converter (DAC), Amplification, and transducers (the headphones or speakers).
Tidal and Apple both have Dolby Atmos mastered tracks re-processed for headphones in their libraries. The neat thing is you just enable it in settings, and the pre-processed Dolby version of the track plays instead of the stereo version mastered for stereo speakers. I use Dolby Atmos processed music all the time with many brands of headphones (lately, the Ultrasone Signature X, Apos Caspian, and Sennheiser HD 560S). Generally speaking, a headphone that sounds very clear is usually better at replaying the subtle nuances that give you directional and distance cues.
It’s also worth mentioning that the new generation of gaming consoles, the PlayStation 5 and Xbox Series, have built-in spatial DSPs as well, and some games from the previous generation also had “headphone surround” modes. Even PUBG Mobile for smartphones and tablets has a pretty good headphone surround mode that is automatically enabled when you plug in headphones.
The thing that Apple AirPods Pro, AirPods Max, and some other headphones like the Audeze Mobius do that is special and next level, is that even with stereo music, they can apply a spatial audio DSP to make the music (or games, movies) have the illusion of sounding like they’re coming from outside your head, further away than the cups (or shells) of the headphones, AND they
track the motion of your head to keep the location persistent. It’s sort of like a Virtual Reality or Augmented Reality headset, but just for audio. What’s cool about that is even small shifts or tilts of your head help your brain “recalibrate” where the sound is coming from, even subconscious movements. The result is more natural like musicians playing in your room, and more immersive. If it’s a typical stereo music track, it will just sound like listening to two speakers placed in front of you, but even that is more natural and IMO pretty cool. Now, to do this, the headphones have to have gyroscopes and accelerometers and little computers (like like VR headsets), but I have seen products from Redscape Audio and Smyth Research that allow you to strap a motion sensor to any headphones and use your windows PC or a standalone processor.
The counterpoint to all this is that headphones have been around for many decades and people still enjoy Grados and other brands without all this extra tech. Dolby Atmos is also not perfect… as I said, it’s one example of a couple spatial audio DSPs on the market, and it’s a “one size fits all” type of design that sounds ok and almost real for 70% or so of people, but for the remaining 30% (especially the first time they hear it, before they adjust, and without head-tracking aids) it can just sound like more reverb and slightly weird instead of 3D. One thing I like about Apple’s (and the PlayStation’s) approach is they have a few different sound profiles to get closer to natural for your ears, so it’s kind of like having a few different “fit” options.
However, I feel that spatial “headphone surround” audio is catching on, and it’s going to be more widely adopted than 3D Televisions. If you would like to try out spatial audio with whatever headphones or earbuds you have now, I highly recommend checking out the album
https://songwhip.com/ottmar-liebert/up-close through whatever streaming service you like