“Pitch is a perceptual property of sounds that allows their ordering on a frequency-related scale, or more commonly, pitch is the quality that makes it possible to judge sounds as 'higher' and 'lower' in the sense associated with musical melodies. Pitch can be determined only in sounds that have a frequency that is clear and stable enough to distinguish from noise.”
The neural mechanisms which allow humans to accurately determine pitch (the most sensitive discrimination being about 1Hz) are as yet uncertain. (What is known is that the sensory hairs in the cochlea respond by induced vibration to specific frequencies.) Various theories have been proposed and tested (info) but none gives a complete explanation for all observed capacities.
Computational modelling has provided new insights into the biological algorithms that may underlie pitch perception, and modern brain imaging techniques have suggested possible cortical locations for pitch mechanisms. Nevertheless, a complete model describing all aspects of pitch perception is still lacking.
(widely referred to as perfect pitch) is an unexplained auditory phenomenon characterized by the ability of a person to identify or re-create a given musical note without the benefit of a reference tone. Early studies found that only around 1 in 10,000 people can do this. More recent studies, however, are showing that the skill of reproducing (or recognising) a piece of music at the correct pitch (though without the ability to name the note or key) is far more common that previously thought - perhaps in the region of 20-40%. Absolute pitch is not necessarily an advantage for musical performers.
See: How well do we understand absolute pitch? Acoust. Sci. & Tech. 25, 6 (2004)
Further info :Wikipedia