This term pertains to the psychoacoustic phenomenon of sound source localization. If a sound source is presented to our ears at the same level, but one arrives just a few milliseconds later, our hearing mechanism will judge the sound to be coming from the side of the head where the earliest sound arrived. How far to one side or the other depends on the difference in time between the sound arriving at each ear. This is true for arriving sounds up to about 25 milliseconds of delay, after which it will begin to sound like two distinct sounds. This phenomenon is used in all kinds of audio production techniques to help position various instruments around the stereo (or three-dimensional) soundfield without creating imbalances in the levels of the left versus right signals.
The effect is also called the precedence effect and means that if there are two sources of sound, as is often the case with PA systems or studio monitoring systems, the sound will be localized to the speaker that provides the earliest sound. The other speaker will not be heard at all in some cases.