The main problem with sensory processing is the difficulty in relating sensory input to physiological responses and perception. This is especially problematic at higher levels of processing, where complex cues elicit highly specific responses. In olfaction, this relationship is particularly obfuscated by the difficulty of characterizing stimulus statistics and perception. The core questions in olfaction are hence the so-called stimulus problem, which refers to the understanding of the stimulus, and the structure–activity and structure–odor relationships, which refer to the molecular basis of smell. It is widely accepted that the recognition of odorants by receptors is governed by the detection of physico-chemical properties and that the physical space is highly complex. Not surprisingly, ideas differ about how odor stimuli should be classified and about the very nature of information that the brain extracts from odors. Even though there are many measures for smell, there is none that accurately describes all aspects of it. Here, we summarize recent developments in the understanding of olfaction. We argue that an approach to olfactory function where information processing is emphasized could contribute to a high degree to our understanding of smell as a perceptual phenomenon emerging from neural computations. Further, we argue that combined analysis of the stimulus, biology, physiology, and behavior and perception can provide new insights into olfactory function. We hope that the reader can use this review as a competent guide and overview of research activities in olfactory physiology, psychophysics, computation, and psychology. We propose avenues for research, particularly in the systematic characterization of receptive fields and of perception.