There are two different types. Relative pitch, and perfect pitch.
They are just sensitivities you are born with that allow you to tell things about music that most people do not have.
Relative pitch is when you have an easy time just "knowing" what certain chords or interval is without knowing ahead of time. They can tell the structure of a certain sound, and tell what part is playing what in the scheme of the chord setup. A very limited amount of people are sensitive enough to even detect it.
Perfect pitch is when you can tell exactly what note is being played just by the way it "sounds" or "feels". I have perfect pitch myself, and I can tell people that they are singing in the wrong key just by listening to them, I can tell when you aren't singing a pitch at all, I can tell if you are sharp or flat on a certain note and I can tell how much. Different people are sensitive to different degrees, but even LESS people have this than relative pitch.