The brain is amazing. You can tell two instruments apart when they are playing the same melody at the same time. In fact, your brain takes all the overtones (harmonics) that make up the sound of one instrument playing one note and you just hear one trumpet or one piano sound. You don't "hear" all the different frequencies in one instrument as your brain uses unconscious inference to group the similar objects together as one.
You brain can easily distinguish sounds emanating from the left or the right. Our brains also do a pretty good job of detecting if a sound is coming from in front of us or behind us. Where we are deficient is in the up-down plane.
Another area where our brains have difficulty is picking out a unique sound from a group of similars. Take for instance, the violin section of an orchestra. Your brain doesn't hear each violin but instead groups the similar sounds into one sound so you hear the violin section in your head, not 10 different violins. This is great on the ears but if you wanted to detect one violin over the other, it would be very difficult. Those properly trained can detect one violin over the others but that goes beyond listening for enjoyment.
How does all of this apply to the church environment?
First, when you have identical instruments in use, like two guitars, don't EQ them so they sound the same. EQ each differently so each guitar has its natural sound enhanced. Then, in the case of one guitar playing a lead line, bring up the volume for the lead or decrease the volume of the rhythm guitar. You will thus make the sound of the lead guitar pop out against the sound of the other.
Second, after setting your EQ levels for the stage, use the Pan knob to your brain's advantage. When you have two instruments with similar sounds, pan one slightly to the left and the other slightly to the right depending on their location on the stage. By doing this, the brain can better identify the sound to its source.
Our brains can easily process different sounds. It's my job, as the sound guy, to give the brain the best mix to do that.
[note: edited order of EQ/panning for process order]