I've been reading about different headphones having wider or narrower soundstage. I own AKG K701. Now, in regular songs I am not able to say - this instrument is to the front-left, other instrument is in front of me and so on...
I don't get that kind of "separation". But what I did notice when I first plugged K701 in is this.
I honestly thought I forgot to turn off my speakers, it really seemed that the sound was coming from the front, not from right and left. Is this what soundstage means?
Soundstage is an inherently speaker term since for the most part you need speakers to replicate soundstage. This is primarily because recordings were meant to be played back by speakers, and the in-room playback is basically to project the location of instruments to the listener laid out in front, achieved through controlled reflections as well as careful filtering of sound across the two channels that will interact with a room via controlled reflections (ie too much reflections and it will screw up the soundstage). It's the same as putting a sound source like a drum in a specific location and hten hitting it, and it will bounce around and what you hear tells you where that sound came from, so in a recording, it's recorded to make it sound like that relative to the two speakers.
With headphones it has traditionally been problematic primarily because each ear will only hear the driver that is sitting on top of it, unlike in a speaker system where both ears hear both speakers' sound interacting with the room. So assuming the room isn't screwing with the sound, you'll get to hear positional cues. Think of that same drum example above and how tapping on it makes a cat or dog swing the ears all around to locate it - that's how speakers work in a room - something you don't get with headphones.
One other issue that exacerbates that problem is how headphones are traditionally designed with the drivers smack over the ear canal. Even in a car with the speakers aimed directly at each other the speakers are to the front of the driver, not flanking him (the asymmetrical interior however is the main problem in a car, but that's for a completely different discussion). The K701 at least deals with this one problem by having angled earpads, effectively positioning the drivers to the front of the head at an angle the same way you have speakers in front with toe-in. This is why you're hearing the sound more from the front than from left and right. A lot of headphones utilize a similar feature - Audeze and HiFiMan also use angled pads on some of their headphones, while the K812, HD800, HD700, CD300, T1, T5P, a bunch of Ultrasones, etc have the drivers mounted towards the front of the earcups with a toe in angle. The Sony Qualia Q10 actually has both - it has an angle mount plus asymmetrical earpads.
Basically, soundstage is inherently a feature for (proper) stereo speakers, and the K701 is among the few headphones that does well enough with it to not sound too much like the stereotypical headphone.
When watching movies, there was a few moments that I had to take off my speakers and check if the certain sound was coming from the headphones or from real world. It felt so real.
While this is interesting, sometimes that annoys me because it always feels that the sound is coming from some distant place.
It mimics speakers, which, unless you're using (relatively) crappy speakers cranked up too loud, will sound like they're coming from farther away. Take the Focal Stella Utopia vs their own Chorus series. The Chorus isn't crappy but compared to the technical advantages of the Utopia (ie a flatter response and better dispersion), by comparison it pushes most of the sound forward, with the bass drum and guitar just lagging behind. The Utopia on the other hand images the vocals closer to the speakers, then has the bass drum well defined but still spatially clearly coming from behind the speakers (take away the toe in angle and that goes away too).
That's what the K701 was designed to do, really, if at least at the cost of an early bass roll off (the K702 addresses that with no imaging penalty). If you don't like that effect you can always get a Grado for the ultimate in your head non-imaging and in your face sound made possible by its upper bass and midrange boost as well as high efficiency that lets them get loud with less power and effort from whatever they're plugged into. Or an HD600.
Speaking of the HD600, I put angled Brainwavz earpads on mine to move the cymbals back and towards the center. Because if you have to scale down a band to the size of your head, a drummer that has the cymbals waaaaaaaaaaaaay off to the flanks where the guitars are is just weird, unless it's a wacky Fantastic Four cartoon episode where Reed Richards shows off his stretchy arms by having the cymbals off to the flanks of the stage. You can get that in speakers too, except in that case it's due to excessive reflections (or excessively loud tweeters).