The Pythagorean system is so named because it was actually discussed by the famous Greek mathematician and philosopher, who lived in the sixth century B.C. Pythagoras understood the simple arithmetical relationship involved in intervals of octaves, fifths, and fourths. He and his followers believed that numbers were the ruling principle of the universe, and that musical harmonies were a basic expression of the mathematical laws of the universe. Their model of the solar system involved the earth and other celestial spheres revolving around the sun, each sphere making music as it revolved.
In the Pythagorean system, all tuning is based on the interval of the pure fifth. Pure intervals are the ones found in the harmonic series, with very simple frequency ratios. So a pure fifth will have a frequency ratio of exactly 3:2. Using a series of perfect fifths (and assuming perfect octaves, too, so that you are filling in every octave as you go), you can eventually fill in an entire chromatic scale.
The main weakness of the Pythagorean system is that as you continue on your series of perfect fifths, you eventually come back to the note that you started on. (See The Circle of Fifths.) For example, starting on C, a series of perfect fifths would be: C, G, D, A, E, B, F sharp, C sharp, G sharp, D sharp (or E flat), A sharp (or B flat), F, C. And the C that you arrive at after a series of pure fifths is a little higher than the C that is several perfect octaves from your beginning C. So instruments that use Pythagorean tuning have to use eleven pure fifths and a smaller "wolf" fifth in order to keep all octaves pure. Keys that avoid the wolf fifth sound just fine on instruments that are tuned this way, but keys in which the wolf fifth is heard often must be avoided. To avoid some of the worst problems with wolf notes, some harpsichords and other keyboard instruments were built with split keys for D sharp/E flat and for G sharp/A flat. The front half of the key would play one note, and the back half the other (differently tuned) note.
Pythagorean tuning was widely used in medieval and Renaissance times. Major seconds and thirds are larger in Pythagorean intonation than in equal temperament, and minor seconds and thirds are smaller. Some people feel that using such intervals in medieval music is not only more authentic, but sounds better too, since it was in fact conceived in this tuning system.
More modern Western music, on the other hand, does not sound pleasant using Pythagorean intonation. The thirds are simply too far away from the pure third. In medieval music, the third was considered a dissonance and was used sparingly, but modern harmonies are built on thirds (see Triads).