http://audiotools.com/ordabok_h.html
Psychoacoustic Masking
Actually a set of techniques used to "fool" the ear or rather to get around various shortcomings in devices or techniques by exploiting certain defects, non-linearity’s and other abnormalities in how your ears work and how the brain makes use of audio information. The simplest and the most commonly seen technique is to make use of the integration tendencies of your ears, for instance you cannot detect distortions that are less than 1ms since the ear will simply ignore them and integrate what became before and after into one distortion free sound, so if a distortion can be shaped into extremely sharp transients by concentrating the energy, you will not hear it.
http://en.wikipedia.org/wiki/Psychoacoustics
In some situations an otherwise clearly audible sound can be masked by another sound. For example, conversation at a bus stop can be completely impossible if a loud bus is driving past. This phenomenon is called masking. A weaker sound is masked if it is made inaudible in the presence of a louder sound. The masking phenomenon occurs because any loud sound will distort the Absolute Threshold of Hearing, making quieter, otherwise perceptible sounds inaudible.
The reason that fans, soft music and sound machines work to reduce the effects of tinnitus is because of the phenomenon of psychoacoustic masking. The ear acts as an integrator, that is it has a amplitude “sweet spot” and noises below this threshold are inaudible. Noises above the threshold raise it.
The ringing you hear when no other audible source is present is due to damage to the inner ear. This sound is real, not imagined, but is very low level. Any source that is 10 dB louder (10 dB is a 10 times power level increase and also the amount of increase required for most people to detect a change) will usually cause you to not recognize or be annoyed by the ringing.
Regards from a fellow sufferer,
Hank