I guess I was just thinking more of lossy audio compression, and how psychoacoustics plays a role. When the data is thrown out, noise is created, and the idea is that it will be masked by other sounds. Here's another explanation from wikipedia. It's not very scientific, but I can't find the other better articles I have read on psychoacoustic modeling:
"While removing or reducing these 'unhearable' sounds may account for a small percentage of bits saved in lossy compression, the real savings comes from a complementary phenomenon - noise shaping. Reducing the amount of bits used to code a signal increases the amount of noise in that signal. In psychoacoustics based lossy compression, the real key is to 'hide' the noise generated by the bit savings in areas of the audio stream that cannot be perceived. This is done by, for instance, using very small amounts of bits to code the high frequencies of most signals - not because the signal has little high frequency information (though this is also often true as well), but rather because the human ear can only perceive very loud signals in this region, so that softer (noise) sounds 'hidden' there simply aren't heard."