Audio as a part of game design is an often "neglected" part. Usually because it's a low priority to what a game NEEDS to function. A game needs programming and visual interfaces which is why so much effort is put into a game. Audio was not a necessity in a game. For a long time they were just beeps and buzzes. Now that we are in a more sophisticated generation of games, audio plays a larger role or can. There are a few games that rely on audio as part of the game play.
What Audio Does
When I was working on my master's project, we were almost completely focused on getting graphics and programming in. In my evaluation, I was told that my game needed more audio to feel more complete. And you know what? There is a world of difference between my soundless game and my game with audio.
And it was nearly effortless. All we had were some bells and whistles for positive and negative feedback. A click noise for buttons. And some sound loops for background audio.
In short here are some things audio does for a game.
1) Adds Polish - while this a very simplistic sounding job, does make a game feel finished.
2) Provides Feedback - humans associate certain sounds with a good or bad feeling. An irritating noise for negative feedback is a quick indicator that an action was wrong.
3) Validates an action - that click noise is an indicator that YES you did click the button.
4) Creates an environment - sound effects can reaffirm a game location. Such as jungle noises for a jungle setting. It helps with immersion.
5) Creates an emotion in a player - In a study I read, players found a game more intense and more frightening with the sound on. Music can create different emotions and fire off different parts of the brain. And sudden loud noises are a sure way to at least make me jump.
Types of Audio in Games
Most of game audio is similar to film audio with a few exceptions.
The difference is reaction sounds such as the click of a button or a grunt after you command an action from the character. These act as indicators that the program recognized your command. This works with the visuals of course. A happy chirrup to me at least makes me feel confident that the program recognized my action. It's subconscious but it's there.
Similar to films, sound effects and music play a role similar to anything visible on the set. Like a stage there are background and foreground sounds. Background sounds are usually the musical score used to set a mood in the scene. It's fast-paced if the action is fast or slower for a more emotional scene. Sound effects play both in the background and mid-ground. Subtle sound effects such as trees rustling or just the expected sounds of the scene I consider background. That doesn't mean they're unimportant but it does mean that they are meant to be subtle and build the scene. Mid-ground or even Foreground sound effects are sounds that the characters are reacting to or causing. Hammering a nail, cutting food, breaking glass and so on. Lastly, voice overs. Are probably the most foreground sounds since they are what we are paying attention to. The words tell the story.
This leads to my next point.
I'm coming to appreciate this art more and more as I listen to commentaries by voice actors and listen to my own voice online. Usually I'm a terrible voice actor. It could be that I have a really crappy microphone or that I'm currently living at home and would be embarrassed to go all out. On top of having a good sound environment and equipment, being a good actor with JUST your voice is a challenge.
Currently, I'm planning on making a commentary for a game with a lot of cutscenes so I'm listening more carefully to the voice actors/actresses and finding little nuances which I feel make a good voice versus a bad voice. There are voices that "fit" a character. Now you can play with this as a design decision but a character's voice should fit their visual look. Having a petite girl have a deep, gruff voice is great for parody because that's NOT what you'd expect. A petite girl needs a petite voice.
Then there's chemistry between two character voices. When you have a very talented voice actor with a not as talented one, you can hear a difference. One will just sound more bland than the other. It also can depend on if they record together or separately. If one recorded before the other, the second actor can play off the first performance. Which gives the second actor an edge over the first.
It's the sound designer's job to make sure all the audio is working together for a desired effect. Now, I'm no expert in this field. Sound has always been the weakest point in all of my productions. (Particularly my animations). Again, good equipment and recording environment helps create GOOD quality sound. That's why my sound is so weak. I also don't have a very good ear for nuances like some sound artists. I can not play an instrument by ear nor sing music just by looking at the notes on a page. Knowing a sound and where it fits takes some talent.
However, even a toneless ear like mine knows when something sounds "bad" and when something sounds "good". If working on Indie things there are resources to download good quality sound effects for free or a small fee.
http://www.soundsnap.com/ - Sound Snap is one of my favorites for high quality sound effects and music loops. You don't have to filter through as much crap as other sites. You get 5 free downloads a month and you can pay for a subscription for more OR wait another month for 5 free more. ;)
http://www.flashkit.com/ - This is another free-ish resource although the quality of these sounds are less awesome. Always free though.
Believe it or not, I did take a sound design course in undergrad. There are lots of fancy microphones and things you can get to make pro quality sounds.
For the cheap Indie like me just making games for fun, you can find most of your needs online. But for audio, expecially voice acting head-set game or internet phone headsets are pretty decent. The foam boom mic captures voice well and most are pretty good at filtering out other outside noises. (Noise cancelling).
If you're more serious, then you'll want some multi-directional microphones, with a P-pop screen and a mixing board. Or if you want to record your insturments. Keyboards, I think can be directly plugged into a mix board/computer. Guitars: for acoustic you need a mic near the body of the guitar. For electric you need a mic by an amplifier. (I had to mic a rock band once. ONCE. I forget the exact TYPE of microphone we used, but hey...that's what google is for.)
The room you are recording in should have NO ECHOES. Ideally, a booth with soundproof material on the walls. But for an Indie, a carpeted room or making a tent booth should be possible. Or just hope that your noise cancelling mic is truely awesome.