I’ve been trying to look it up online, but with no success so for. So I’ll ask here, how does simulated stereo work?
I used to have a friend that had a stereo with that option, and while it did improve (in my opinion) the sound of mono sources, like AM radio for example, it obviously wasn’t the same as real stereo. Oh, and on a side note, sometimes it sounded very cool to listen to a stereo FM station or tape with simulated stereo on too.
But anyway, back to the question at hand, how does simulated stereo work?
There are various ways to do it, especially with modern digital signal processing. But as far as I know, most methods use small phase differences present in the signal, or process the signal to create phase differences, and then create a “stereo” signal as if they were decoding a real multi-channel signal that had been previously encoded to use fewer channels.
Take a look at this link (especially the third page) for one companies approach:
http://www.srslabs.com/pdf/srs%20technical%20description.pdf
The success of any approach at simulating stereo usually varies widely with the source material. Some stuff sounds pretty good, some very bad, some doesn’t change much.
And I think that should be “company’s” approach. It’s been a long night, any other glaring typos will have to stand. 
Ugly
Wow, thanks for the link to the hi tech information.