Out of sheer curiosity, I tried playing a DVD of Skyfall at the weekend in the car to test the B&O sound quality as it's supposed to reproduce authentic 5.1 surround sound with DVDs. Sounded absolutely epic. Sound was as good as watching it in the cinema!
For music, it does digitally alter the sound to create the surround sound effect, (configurable in the sound settings menu). I tend to keep mine on half setting for the surround effect.