Binaural Beats are created by sending a different tone into each ear. The tones are mixed together ‘inside' your head by your brain, resulting in a pulse also called a ‘beat'. So as an example, you might send a frequency of 200hz into your left ear, and 190hz into the right. This would create a beating tone in your brain at 10hz.
The lower of the two tones is called the ‘carrier' and the higher one the ‘offset'.
The beat you hear is actually created inside your head, not externally. This is because your brain creates the beat after working out the differences from each ear.
Because of how Binaural Beats work, you always have to listen to them with headphones on, so that each ear can receive a different frequency. If you listen to the same Binaural Beat audio without headphones, in most cases you will hardly be able to detect a beat at all, because your ears will be able to hear both frequencies at once and the effect is lost.
This can be a drawback with Binaural Beats, because it's not always practical or desired to listen to entrainment with headphones on.
How a typical Binaural Beat would look in your brain:
The fluctuation in the wave pattern is what creates the resulting beat.
Because Binaural Beats were the first breakthrough in audio brainwave entrainment, they are still the most well known. But there is another more modern and up to date form of brain entrainment which called Isochronic Tones.
Isochronic tones are the most modern form of audio brainwave entrainment. They create a much more obvious and distinctive beat, which results in a much more powerful and effective form of entrainment.