The brain's ability to focus auditory attention on a particular stimulus while filtering out a range of other stimuli, like background chatter, is an example of the Cocktail Party Effect.
Top (L-R): Mash [1970] • McCabe and Mrs Miller [1971] Bottom (L-R): Thieves Like Us [1974] • Nashville [1975] dir. Robert Altman
Robert Altman was interested in creating realistic multi-character dialogue within a given scene. His use of multiple radio microphones to create naturally overlapping conversations is well-documented. Less noted is the performance style of many of his actors.
Dialogue parts often appear to lack theatrical performance projection; lines are sometimes mumbled and uttered quietly, mixing with the dialogue of other characters nearby. There is an intended naturalism to these conversations that feels closer to Cinéma Vérité documentary-filmmaking than classical Hollywood style.
For the modern viewer used to ultra-close and controlled dialogue (a result of practical production sound concerns in commercial filmmaking as much as stylistic convention), the sum effect of this overlapping, under-projected naturalism can lead to a sense of compromised intelligibility - we’re not exactly sure what’s always being said. *
The Altman approach to dialogue naturalism is further extended by his casting of non-professional actors who are less accustomed to theatrical voice projection. Technical enhancements are achieved in-camera and later in post-production; wider ensemble shots are favoured over single character close-ups, while overall dialogue mixing is less concerned with total intelligibility of every uttered word.
* Director Christopher Nolan's so-called ‘punk style’ might be considered a recent exception to the Hollywood drive for ultra-intelligibility, though whether his approach is entirely effective or not for the kind of films he makes, is another question.