The software capture your voice through microphone, play karaoke tracks, mix them and playback the result through headphone. Then the sound leaked to the environment is only your voice whose volume is commonly low during karaoke since the amplifier and speakers do the work in real karaoke.
The mixing process is in such a way that you have an immersive experience to be in a professional designed karaoke room with the best speakers with appropriate room layout and wall materials.
The existing karaoke apps's experience can never be compared with that. The missing component should be the 3D acoustic emulator.