I have a full 7.2 set up, the maximum my Pioneer VSX 1131 can support--FL, FR, C, SL, SR, BSL, BSR, HL, HR (9 Speakers in total) + 2 Subwoofer, HL & HR configured in the middle of the ceiling, Back surrounds in the rear ceiling positions.
When the source is Dolby Atmos/DTS-X, the discreet object based sound formats, the surround effect is natural. For example suppose a scene where a helicopter is flying it appears as if the helicopter is hovering, overhead. There is no virtual sound.
Now when the source is just a 5.1 DD, the Extended Stereo besides playing the standard 5.1 surround sound, also sends surround signals to Middle height speakers and back surrounds. Complimenting each other, the overall surround effect is more satisfactory than a simple 5.1 surround effect. There is no virtual sound.