for me, the closer i get to the sound of an instrument in a live setting, the happier i am.
Then spend more time listening to live music.
You're subject is the reproduction of that music by an artificial means. First off, what music sounds like in a live setting may be different to you than it is to me. It will certainly be different depending upon the setting, where you listen from, live mixing, the crowd, the room, your mood, blah, blah, blah. Sometimes live music can sound simply horrible, as we all know, and we wonder why we spent the coin when we could be more moved by the same music on our own system at home. It happens. It all comes down to subjective opinion...what makes you "happy" may not be what makes me "happy". That said, yes, I think I agree with you on some level that what one of the things that engages me most about my system is the illusion of a 'realistic' presence. I don't know that brings us much closer to some objective definition of "good sound" though but I suppose it's something. Again, it becomes subjective...those qualities in a system that make music sound "live" to you may be quite different to those that I am engaged by.
Marco