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In the 90's I chalked it up to "surround or 5.1 marketing" but it might have been something else https://www.pcmag.com/encyclopedia/term/3d-audio

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Yeah, there were several manufacturers who produced soundcards that basically offered two channels of sound, but where elements creating sound on-screen could be positioned as in a 3-dimensional world. I had a Packard Bell with an A3D[1] card, and I remember being fascinated by the demos they supplied.

[1] - https://en.m.wikipedia.org/wiki/Aureal_Semiconductor#A3D

And how did DRM get in the way of that?

Just with Creative's effects extensions, you can do virtual 3D sound in Software just fine now: https://www.pcgamingwiki.com/wiki/Glossary:Surround_sound#Bi...

Next step would be to simulate and actual 3D sound environment but with GPGPU compute I don't think that needs dedicated hardware either.

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