The theory of Music in Context is based on the idea that people enjoy different types of music depending on the context in which it is heard. For example, dance or electronic music is fitting for a club setting, but it is not something many people would sit down to listen to while trying to write a term paper or a computer program. Similarly, postrock bands, such as Mogwai, provide great music to listen to while doing work, reading, or just hanging out, but it is not particulary good to dance to.
What all of this boils down to is context. The setting one is in influences a person's state of mind to the point that his or her personal taste in music may be diametrically opposed to what it normally is.
The context in which a piece of music is heard may extend beyond simply the setting to include those who are around the individual in question. In this sense, the people with whom one hears a song play a role in one's response to the piece of music.