A room within a room is most effective at (and most often used for) sound isolation. If you build a well sealed and soundproofed room inside a larger room, you can get an amazing amount of sound and vibration isolation from the outside world, and vice versa. Depending on the shape, dimensions, and construction materials, you can make the room better suited acoustically for audio reproduction. You can built bass traps and absorbers into the walls. You could design the shape so there are few corners. There are many things you can do.
The main drawback (aside from cost) is the size. You really need a large outer room to house the inner room if you want to get the best acoustics for audio reproduction. Things like tall ceilings and longer wall dimensions are really good.