One of the guiding concepts behind the development of the Crystalizer is that music as engraved on audio CDs - the almost universal foundation of all our music collections - is nothing more than an attempt to optimize the end user's listening experience in spite of the limitations of CD's 16 bit quantification, and of typical domestic playback systems. That approach is well known to professionals, and consists of corrections - essentially compression of dynamic range - that aren't fundamentally different from one disk to another.
The goal of the Crystalizer is to restore the sound of the original recording (as it existed before mastering the CD) through a kind of "reverse engineering" that applies corrections that are the inverse of the ones typically used during mastering. The basic idea is to consider the entire process - from the original recording to home reproduction - rather than putting the marketing medium (generally CD Audio) on a pedestal and making it the absolute reference. After all, if there's going to be a reference, it should be the sound produced by the musicians; in the absence of anything closer, the recording made during the original session makes sense. Logically, it shouldn't be the disk you buy at your local record store.
The instruments that are most affected by the dynamic compression applied during mastering operations are obviously those that produce the most transients. For the sound engineer, it's much more comfortable to compress these in order to make them fit easily into the dynamic range offered by 16 bit quantification. The Crystalizer - using its DSP - attempts to distinguish between transient sounds and more sustained sounds, and modify each of them appropriately. It's obviously not a just a matter of wholesale dynamic expansion! The algorithms are naturally a secret, but Creative does say that frequency analysis is part of the process. Clearly, a bass-drum kick has to be handled differently from a cymbal clash!
A comparison of an audio signal before and after processing by the Crystalizer. An attack (transient,) surrounded by red, is much more energetic after processing. On the other hand, you can see that the part surround by blue - where transients are less significant - hasn't undergone the same processing.
Overall, the Crystalizer provides sound with more powerful bass, more dynamic midrange, and clearer highs. The result is obviously in 24 bits to be able to handle the extended dynamic range. The processing is also capable of clearly improving the reproduction of compressed sound, such as MP3s.