Pressure altitude is the altitude in the standard atmosphere corresponding to a particular pressure level. The airplane altimeter is essentially a sensitive barometer calibrated to indicate altitude in the standard atmosphere. If the altimeter is set for 29.92" Hg (Standard Datum Plane) the altitude indicated is the pressure altitude - the altitude in the standard atmosphere corresponding to the sensed pressure.
The Standard Datum Plane is a theoretical level where the weight of the atmosphere is 29.92" of mercury as measured by a barometer. As atmospheric pressure changes, the Standard Datum Plane may be below, at, or above sea level. Pressure altitude is important as a basis for determining aircraft performance as well as for assigning flight levels to aircraft operating at high altitude (above 18,000 feet).
The pressure altitude can be determined by either of two methods: (1) by setting the barometric scale of the altimeter to 29.92 and reading the indicated altitude, or (2) by applying a correction factor to the elevation according to the reported "altimeter setting" as shown in Fig. 17-63a and b)
Fig. 17-63 b)