The Audio Bubble is a circle around your avatar where you will see and hear the people on your floor. While someone is in the bubble, you will be able to see and hear each other if your microphone and camera are enabled.
If someone is outside of the audio bubble, you won't be able to hear or see each other even if your microphone and camera are enabled and you are in the same room.

Audio bubbles ONLY appear in Spatial Rooms. This means rooms with following icon: