It's known that humans have about 10 cm2 of olfactory epithelium, with roughly 5 million sensory neurons.
Smells are detected due to the activation of neurons by airbourne volatile chemicals and particles. Different chemicals affect different groups of neurons, which, after cerebral processing, lead to the impression of 'smell'.
The exact neurprocessing mechanism is still unclear.
Since any one receptor is responsive to various odorants, and there is a great deal of convergence at the level of the olfactory bulb, it may seem strange that human beings are able to distinguish so many different odors. It seems that a highly complex form of processing must be occurring; however, as it can be shown that, while many neurons in the olfactory bulb (and even the pyriform cortex and amygdala) are responsive to many different odors, half the neurons in the orbitofrontal cortex are responsive to only one odor, and the rest to only a few.
It has been shown through microelectrode studies that each individual odor gives a particular spatial map of excitation in the olfactory bulb. It is possible that the brain is able to distinguish specific odors through spatial encoding, but temporal coding must also be taken into account. Over time, the spatial maps change, even for one particular odor, and the brain must be able to process these details as well.
Also unclear is the number of odours which humans can differentiate. The current estimates are in the region of 1 Trillion, but the figures are currently under dispute. See : The number of olfactory stimuli that humans can discriminate is still unknown eLife. 2015; 4: e08127.
Also see :
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