Frequency-domain correction (EQ) fixes what is too loud or quiet. Time-domain correction fixes when sounds arrive. Room reflections cause the same sound to arrive multiple times at slightly different delays, smearing transients and blurring imaging. Time-domain correction uses FIR filters to reduce the amplitude of delayed reflections, tightening the impulse response.
Time-domain correction is most effective above the Schroeder frequency, where reflections are distinct. Below the Schroeder frequency, room modes dominate and frequency-domain correction is more effective. Advanced systems (Dirac Live, Trinnov) combine both approaches.