Acoustic Sound Treatment

I never dreamed that my room is a "component" and a bad one at that. I would say it is one of the best upgrades I have done to my system.

Can someone explain to me why such a huge difference in sound?

Acoustical design must take into consideration that in addition to physiological peculiarities of the ear, hearing is complicated by psychological peculiarities. For example, sounds that are unfamiliar seem unnatural. Sound produced in an ordinary room is somewhat modified by reverberations due to reflections from walls and furniture; for this reason, a broadcasting studio should have a normal degree of reverberation to ensure natural reproduction of sound. For best acoustic qualities, rooms are designed to produce sufficient reflections for naturalness, without introducing excessive reverberation at any frequency, without echoing certain frequencies unnaturally, and without producing undesirable interference effects or distortion.
The time required for a sound to diminish to one-millionth of its original intensity is called reverberation time. An appreciable reverberation time improves acoustical effect, especially for music; a loud sound should still be barely audible for one to two seconds after the sound has stopped in an auditorium. In a private home a shorter but still discernible reverberation time is desirable.
For modifying the reverberations, you have a choice of two types of materials, sound-absorbent and sound-reflecting, to coat the surfaces of ceilings, walls, and floors. Soft materials such as cork and felt absorb most of the sound that strikes them, although they may reflect some of the low-frequency sounds. Hard materials such as stone and metals reflect most of the sound that strikes them.
In most cases, the acoustics of a room will be satisfactory if a proper balance between sound-absorbing and sound-reflecting materials is created. Troublesome echoes may frequently occur in a room that otherwise has a proper overall reverberation time if the ceiling or a wall is concave in shape and is highly reflecting; in such cases, sound may be focused at a particular point, making the acoustics bad at that point in the room. Similarly, a narrow corridor between parallel reflecting walls may trap sound by repeated reflection and cause troublesome echoes, even though the overall absorption is sufficient. Attention must also be given to the elimination of interference. Such interference arises from the difference in the distances traversed by the direct and the reflected sound and produces so-called dead spots, in which certain ranges of frequency are canceled out.
Another aspect of room acoustics is insulation from unwanted sound.

The Funk & Wagnalls New Encyclopedia are licensed from K-III Reference Corporation. ©1994-96 K-III Reference Corporation. Posted without permission for educational purposes only.
M.S

50% of the sound you hear is indirect, bouncing off walls, ceiling, floor etc. So it is often said that the room is 50% of the sound. You also have major issues with alteration of sound based on room gain at various frequencies, most often bass, but in a room with a lot of hard flat surfaces it can occur in the higher frequencies as well. Having an untreated room is kind of like having a graphic equalizer with random settings on it thrown into your signal path (sort of--but you get the point). How many audiophiles do you know that would say "hey let's add a graphic equalizer with random settings in my signal path", but in a sense that's what's happening with their room.

so should one put panels behind listening position or behind speakers first?

so should one put panels behind listening position or behind speakers first?

I'd go for behind the listener for bass trapping first but generally more broadband bass traps is better and you can't ever really do enough in bass trapping...although you can over do it in the mid and treble frequencies if you have way too much surface area of panels =>an acoustically dead room = yuk!