Binaural recording means constructing an accurate artificial head, and placing microphones in the position of the eardrums. The resulting audio accurately records the effect of the sound travelling through the skull and ears, resulting in incredibly accurate positional sound that can be played back through any standard stereo headphones.
Although it is a challenging technical task this can be simulated digitally, resulting in a a more immersive experience for all headphone wearing players, but of huge benefit for players with impaired vision, allowing accurate enough spatial awareness to navigate 3D environments via standard stereo headphones.
Best practice example: Nightjar (video – stereo headphones required)
More information: Virtual Barber Shop binaural demo (video – stereo headphones required)
More information: Head-related transfer function wikipedia article