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Originally Posted by
mogorf 
How does masking explain that human ears are deficient?
Masking explains how certain measurable deficiencies go unheard. Due to masking, there can be for example a ton of second order distortiion whose effects are completely missed by everybody's ears. However the same amount of nonlinearity of say the fifth order can be easily be heard because the spurious sounds that it generates are at frequencies that are at frequencies that are far further away from the original tone.

The above shows how a pure tone masks nearby tones. For example lets say that the peaks of the curves above are all at 1 KHz. Each curve represents the amplitude of tones that will be masked by the 1 KHz tone of a certain amplitude. As you can see a tone just above or just below 1 KHz will be masked more than a tone that is further away in either direction;
For example, a second order nonlinearity adds a spurious tone at 2 KHz to the original pure tone at 1 KHz. However, the 1 KHz tone masks the 2 KHz tone very strongly. For another example, a fifth order nonlinearity adds a spurious tone at 5 KHz to the original pure tone at 1 KHz. Since the distortion created by the fifth order nonlinearity is further away from the original 1 KHz tone it is less likely to be masked,
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What problems does masking cause for you?
Masking gives everybody problems hearing distortion and noise that is measurable but that turns out to either be not audible or less audible.
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Care to share a real life example you have experienced and wished masking was not there?
I'll do the opposite. I'll give you a real world example of how masking allows us to enjoy some music that on paper is so distorted it should be unlistenable. One word: MP3. Many MP3 files have say 90% or more of the information in their music removed to save space and transmission time. One might think that doing his would result in a horrible sound, but because the removal of information is done in accordance with the rules of masking, we don't notice it all that much.