Ah, multichannel.
I got into quad in the early 70's. Listening to psychedelic songs with 4 channel was "mind blowing" Those early quad was not an attempt at ambience reproduction. Its purpose was to create an artificial surround experience with swirling, ping pong, echos and other elements that the artists and producers were experimenting with. The sound was not realistic but was a wow moment.
Classic and orchestral music was recorded with multiple microphones and the effect was pleasant. Most of the sound coming out of the rear speakers was audiance noise.
In the late 70's, Bob Carver came out with "Sonic Holography". It created an ambiance, not surround, that expanded the music beyond the confines of the room. When listening to certain music, the sound appeared to emanate from outside the room because the sound stage became so wide.
Simple explanation how it works;
Ring a bell on a stage. You are sitting in the center of the room. Your ear picks up the ring with both ears. Your brain calculates the time difference between ears and determines the bells location.
Record the bell with one microphone and play it back with one speaker. Brain picks up sound and calculates same as before.
Record the ring with two microphones in stereo, one on each side of bell at a distance. Play back the stereo recording with two speakers placed apart. Now each ear hears both speakers. But the ears are now receiving 4 signals. Left ear picks up sound from left speaker and right speaker. Right ear picks up sound from right speaker and left. Brain can not compute!
The four signals confuse the brain and the sound field becomes confused and muddied. It becomes tough to pinpoint the sound source.
With Sonic Holography the two extra signals created by stereo is eliminated electronically. Voices and instruments were very clear and could be located precisely on the sound stage. One song in particular stand out. On Dark Side of The Moon, Time, there is a section where bells are ringing. Alan Parsons recorded that part with the multiple bells arranged in a line, left to right. Listen to the recording of the bells ringing and depending on the distance between speakers, the bells will ping pong back and forth between speakers. The location of the ringing bell will not be focused.
Play back the same section with Holography turned on and the location of each bell are crystal clear. Additionally, some of the bells and echoes can be heard emanating from outside of the speaker pair. The Holography also allows locating the sound field not just side to side but also front to back. On the above example Time, some of the bells appeared to be closer to me and some further away.
I used that for years until, like Bill mentioned, Yamaha came out with the DSP