AV is all about imagining.
The idea of the sound tracking the action from left to right, front to back and now up above is exactly what imaging is.
Imagine turning off the video and just playing the audio / sound effects from something like Master and Commander.
You can hear the cannon blasts from the right and left as the ships engage. Cannonballs whiz by overhead and explode into something behind you.
Seeing what you hear, that's imaging.
It does not fit into the "audiophiles" definition of imaging but that's mostly because music isn't generally recorded that way.
You're right. If a stereo only does left and right it's generally said to image very poorly. If a stereo doesn't portray a depth, height, and width well beyond the rectangle formed by the boundaries of the speakers, I'm not impressed. A competent stereo doesn't need to surround you with speakers to give you a sense of height or expansiveness beyond the perimeter of the front channels. It doesn't need a middle channel to give a center focus to voices. A good pair of stereo speakers don't sound like sources of sound, buy that's exactly what AV sound systems depend on.
I personally never found 5.1 or 7.x sound systems convincing or appropriate for watching TV or movies. You're starting at a 2D image with limited sight lines and the sound is coming at you from all directions. It feels unnatural and disorienting to me. I don't think systems like that are well suited to music because they presume an entirely different recording philosophy. One that forces a sense of space by virtue of a wall of sound sources, as opposed to a simple pair of transparent sound sources.
