How does the brain determine the direction from which a sound comes from?

Answer 1

Well, wave length, time lag, tone of sound and experience all combine to determine position and direction of sound. But ear shape plays a part as well...

This is an interesting tidbit though on how the brain learns...
In Nature Neuroscience, Hofman, Van Riswick and Van Opstal (pp. 417−421) offer an intriguing new insight into how our brains learn the characteristics of our own ears and how we might learn to use a different set of ears. They measured the localization ability of four people before and after the shapes of their ears were changed by inserting plastic molds into the pinna cavities. Changing ear shape had a dramatic deleterious effect on localization ability, as previous research would suggest. After six weeks of wearing these molds continuously, though, all four listeners seemed to have learned the new ears, so that their localization was normal again.

Even more surprising was that when the molds were removed, localization was still normal. In other words, there was no aftereffect of the kind typically reported in sensory adaptation studies. It was as if the listeners had learned a new 'language' and now had two sets of ears with which they were proficient. Acquisition and maintenance of a second mapping without erasing the first seems more like learning a second language than like learning a sensory perceptual transformation.
More at second link...

Answer 2

The sound information, encoded in cerebellum, travels down the auditory nerve, through parts of the brainstem , further processed at each waypoint. The information eventually reaches the thalamus, and from there it is relayed to the cortex. In the human brain, the primary auditory cortex is located in the temporal lobe.
This cerebellar co ordination helps to recognise the distance and direction of the sound.

Answer 3

By the difference in time between the ears registering the shock wave.