For example, when House of Wax was released in 1953, it was in stereophonic sound. So does this mean that stereophonic sound is intended to be indistinguishable from real life sounds? Like if a phone rings in a movie, and it’s indistinguishable from a real phone ringing, can’t mono sound be indistinguishable from real life sounds as well? Can’t virtual reality use mono/monaural sound?
Stereo sound is not intended to be indistinguishable from real sound any more than 24fps film is intended to be indistinguishable from real vision.
It is a tool for more capable storytelling and artistic interpretation. By allowing both sides of your head to hear different sounds (like you do in real life) you can make things feel more realistic, which if you do it well can greatly enhance the experience of the movie (or audio recording, or whatever.)
A credible virtual reality system could not work with monaural sound. If your goal is to simulate reality (or at least simulate it enough so you can feel like you’re actually in a fictional world) then you need multidirectional sound sources to provide the necessary stimulus clues for your brain. If a character to your left starts talking to you, and you hear her voice equally on all sides, your brain will know immediately that something is wrong, and the illusion will be ruined.
You don’t need virtual reality to experience good sound staging, though. A properly built and configured 5.1 system in a home theater can be a thing of beauty.
Stereo sound is an absolute minimum for a realistic sound stage (one per ear). More speakers is great and works best if you keep your head still and allow the producer of the audio to create the sound stage for you. If you were wearing a VR headset or something you’d be best to use two speakers only along with a method to detect either real or virtual head movement so the quality of the sounds you hear can be altered to give the illusion of them being in front of or behind you as appropriate.