Every person has a unique HRTF based on their anatomy. The folds of the outer ear (pinna) create frequency notches that vary with sound direction — the brain learns to associate these spectral patterns with locations. HRTFs are what make binaural audio (listening on headphones) sound like it is coming from outside your head.
HRTF-based spatial audio (Apple Spatial Audio, Sony 360 Reality Audio) applies generic or personalized HRTFs to create immersive 3D sound from stereo headphones. Personalized HRTFs (measured from photos of your ears) produce significantly better spatial accuracy than generic ones.