Imagine you have a really big party in your ears with lots of little helpers that help you hear things. These helpers are called hair cells and they are spread out like a red carpet from the entrance of your ear to the exit.
Now, when a sound comes into your ear, the hair cells closest to the entrance will get tingled first. Just like if you tickle your toes, you feel it there first before you feel it at your knee or thigh.
The hair cells that are closest to the entrance of the ear are the ones that respond to high-pitched sounds like a whistle, while the ones at the exit would respond to low-pitched sounds like a drum.
So, basically, place theory says that different parts of your ear are responsible for hearing different pitches. And this helps you understand what you are hearing and where it is coming from!