I obviously can't say anything concrete as it was a demo at an event, but honestly I think it was at least as good as the HD598's audio.
Actually, in a response on Reddit, Palmer Luckey himself said that it was on par with level of quality you would get on something like an AD700. Considering they have full control over the whole audio stack from DAC to driver, it's entirely possible they also have a very even frequency response. I heard honestly surprising amounts of bass from what I remember. The imaging and soundstage was insanely accurate, but that's hard to compare because you also get headtracking, meaning you get more sound localization cues.
Other than sound quality, what separates an integrated audio solution on a VR HMD from just wearing normal headphones on top, is that you get the ultimate comfort. There is minimal to zero clamp on your ears because the force is distributed by the semi-rigid strap system. Imagine if you were never wearing headphones at all and sound magically just came into existence next to your ears. That's how comfortable it is. That also means your brain is much more easily convinced that the sound isn't coming from an artificial source like headphones.