While the homing flight of pigeons is a process that is still not completely understood, scientists have two working hypotheses. The first hypothesis involves an "odor map." It proposes that young homing pigeons learn to reach their home by following a trail of wind-borne odors. A pigeon would, for example, learn that a certain odor is carried on winds blowing from the east. If the pigeon were then transported eastward, the odor would provide a cue to fly westward to return home. The second hypothesis is that a homing pigeon learns the location of its home by using the earth's magnetic field as a compass.
We may learn in the future that one of these theories is correct, that some combination of the two theories is correct, or that there is an alternative explanation for a pigeon's navigational abilities.
Source: Mace, Alice E., ed. The Birds Around Us, pp. 160-61.