Altitude - is a distance measurement in the vertical or "up" direction, between a reference datum and a point or object. (wikipedia)
There are four important types of altitude for pilots, Absolute altitude, Pressure altitude, Density altitude, and Indicated altitude.
Absolute altitude is the actual distance above Mean Sea Level (MSL).
Pressure altitude is the altitude shown on an aircraft altimeter when it is set to the International Standard Atmosphere (ISA) standard pressure" (29.92 inches of Mercury). When flying in Class-A airspace (above 18,000 MSL) pilots are required (in some countries) to set their altimeters to ISA, and fly at a "flight level" assigned by Air Traffic Controllers. Using this standard setting helps pilots to maintain more accurate vertical separation between aircraft at higher altitudes. Pressure altitude is also used to calculate density altitude.
Density altitude is pressure altitude adjusted for temperature, and it is the altitude that determines how the aircraft performs. Cold temperatures make the air more dense than it is in the ISA, so (a) there is more oxygen available for a piston engine (and it develops more power), but (b) the plane flies more slowly through the dense air. Hot temperatures make the air thinner than it is in the ISA, so (a) these is less oxygen available for a piston engine (and it develops less power), but (b) the plane flies faster through the thin air.
Here are some of the practical effects of density altitude:
- At a low density altitude, a piston-engine plane will be able to take off from a very short runway and climb very fast, but once it is cruising, its true airspeed will be relatively slow.
- At a high density altitude, a piston-engine plane will need a longer runway to take off and will climb slowly, but once it is cruising, its true airspeed will be relatively high (assuming that the engine can develop sufficient power). The ideal density altitude for cruising in a normally-aspirated piston aircraft is 7000-8000 ft DA: that's where the plane finds the perfect compromise between thin air and oxygen for the engine. On a hot summer day, that density altitude could occur as low as 4000-5000 ft MSL; on a cold winter day, it could occur at 10000 ft MSL or higher. Turbocharged propeller aircraft, which compress the air to provide more oxygen for the engine, often fly between 14000-18000 ft DA to take advantage of the thinner air.
The indicated altitude is the altitude shown on the altimeter when it is using the correct altimeter setting. It will be identical to absolute altitude when the plane is sitting on the ground, but, unless the temperature lapse rate is exactly the same as ISA, it will become increasingly inaccurate with altitude: on a cold winter day, the altimeter can overread by 1,000 ft or more at normal cruising altitudes, so that pilots are flying much lower than they think; on a hot summer day, the altimeter can underread by 1,000 ft or more at normal cruising altitudes, so that pilots are flying much higher than they think. Since all altimeters experience the same error, and the error diminishes near the ground, the difference between indicated altitude and absolute altitude does not normally cause a problem for cruising and approaching: as long as everyone is flying at, say, 8379 ft MSL, it does not much matter if they think that they're at 9000 ft. The one exception is flying around mountains in the winter, where the altimeter error can cause collision with terrain.