This technique was invented by Jürg Jecklin, the former chief sound engineer of Swiss Radio and teacher at the University for Music and Performing Arts in Vienna.
It is a refinement of the baffled microphone technique for stereo initially described by Alan Blumlein in his 1931 patent on binaural sound.
Jecklin's German from his script: "Zwei Kugelmikrofone sind mit einem gegenseitigen Abstand von 36 cm angeordnet und durch eine mit Schaumstoff belegte Scheibe von 35 cm Durchmesser akustisch getrennt.
"[1] The effect of the baffle is to introduce some of the frequency-response, time and amplitude variations human listeners experience as positioning cues, but in such a way that the recording also produces a useful stereo image through loudspeakers.
There are multiple variations of this technique, with "discs" of varying sizes and shapes, all of which work to some degree in helping to create a recording with a more believable stereo "image" than a spaced pair of microphones, but the size of the barrier is critically related to the lowest frequency at which it operates.