An article on the AGH University of Science and Technology website has details on the RAYA real-time sound engine for video games, which tackles audio reproduction with the type of ambition that is often reserved for improving game graphics. Word is: "All audio effects are computed based on the actual geometry of a given game level as well as its acoustic properties (acoustic materials, air attenuation). The sound changes dynamically along with movement of the game character and sound sources, so the listener can feel as if he was right there - in the game." They offer this video demonstrating how this works using Quake III Arena. Thanks Wookiestick.