Neuroscientists at the University of California, Berkeley have conducted an experiment that explains how we are able to keep from being overwhelmed by constant sensory input from odors. The researchers used MRI technology to monitor the brain activity of two groups of volunteers, only one of which was told that the experiment was about odor. When both groups were exposed to odors, the group that did NOT know the experiment was about odor showed less activity in the areas of the brain that process odor.
It turns out that the brain is detecting and processing all the odors around us, but a particular area of the brain actively tunes this out unless the odor reaches a high level, such as when we walk into a cloud of cloying perfume or step in dog poop.
When we want to sniff for odors, however, the brain releases the block and begins to pay attention to the smells around us. It even tunes in very precisely to specific smells, allowing us, for instance, to search for a hint of blackberry in a glass of zinfandel.
I wish they had tested how well the volunteers did at finding particular odors, and whether they were better able to detect them when they knew what they were looking for. It is rather off the topic of the experiment, but I find testing a new perfume much more rewarding when I already know at least some of the notes. If I don't know the notes, I usually try to decide what other fragrance it smells closest to, and apply that fragrance to my other arm. This allows me to focus more closely on what notes are "new" in the fragrance I am testing.