Is this something that only works on movies and video. Do the movies have to be formatted a certain way for sound in order to take advantage of the Spatial Audio?
The Apple executive who presided over Monday's keynote segment (was it Craig?) explicitly said that Spatial Audio was compatible with Dolby 5.1, 7.1 and Atmos sources.
Does Spatial Audio do anything for music listening?
Unknown. This was not covered in the keynote. However, based on the fact that very little audio is encoded in Dolby 5.1, 7.1 or Atmos, I would say Spatial Audio will have minimal effect on music listening.
All my devices are on the new betas. My Airpods Pro are on the new firmware. Is Spatial Audio already activated?
Developer documentation and other resources should cover this. If there is support, most likely you will see
large amounts of discussion in the appropriate forums (perhaps not here at MR).
While I am not involved in the developer betas at all, my guess is that the lack of commentary about this specific feature here tells me that it is not yet active for ig Sur/iOS 14 beta testers at this time.
Listen to a source that uses Dolby 5.1, 7.1 or Atmos sound. Monday's keynote demo was pretty clear. They had a user play back a movie on their iPad.