Functional binaural models have been used since the mid-20th century to simulate laboratory experiments. The goal of this chapter is to extend the capabilities of a cross-correlation model so it can demonstrate human listening in complex scenarios found in nature and human-built environments. A ray-tracing model is introduced that simulates a number of environments for this study. This paper discusses how the auditory system is used to read and understand the environment and how tasks that require binaural hearing may have evolved over the course of human history. As use cases, sound localization in a forest is examined, as well as the binaural analysis of spatially diffuse and rectangular rooms. The model is also used to simulate binaural hearing during a walk through a simulated office-suite environment.