To perform adaptive behaviours, animals have to establish a representation of the physical “outside” world. How these representations are created by sensory systems is a central issue in sensory physiology. This review addresses the history of experimental approaches toward ideas about sensory coding, using the relatively simple auditory system of acoustic insects. I will discuss the empirical evidence in support of Barlow’s “efficient coding hypothesis”, which argues that the coding properties of neurons undergo specific adaptations that allow insects to detect biologically important acoustic stimuli. This hypothesis opposes the view that the sensory systems of receivers are biased as a result of their phylogeny, which finally determine whether a sound stimulus elicits a behavioural response. Acoustic signals are often transmitted over considerable distances in complex physical environments with high noise levels, resulting in degradation of the temporal pattern of stimuli, unpredictable attenuation, reduced signal-to-noise levels, and degradation of cues used for sound localisation. Thus, a more naturalistic view of sensory coding must be taken, since the signals as broadcast by signallers are rarely equivalent to the effective stimuli encoded by the sensory system of receivers. The consequences of the environmental conditions for sensory coding are discussed.