Unlike other breeds of domestic animal, horses almost never have floppy or 'lop' ears. (It does exist, but is a rare mutation rather than a breed trait).
Most horses have small leaf-shaped ears that may or may not curl inward slightly at the tips - these are sometimes called 'fox' ears. An Indian breed, the Kathiawari/Marwari, has such extreme fox ears that the tips often touch. Donkeys have longer, straight ears, whilst mule ears are somewhere between the two.
A horse's ears are located on the very top of its head. If a horse has dark points, then the edge of the ear is usually dark. Dun horses may have two tone or completely dark ears.
Equine Hearing
Horses have very good hearing. They can, like humans, handle several sounds at the same time. When a horse focuses on a particular sound, he will swivel one or both ears towards it. The more interesting the sound, the more likely it is that both ears will turn (if you want to see this, rustle a treat bag).
The equine hearing range is wider than ours and their hearing is more sensitive. This is one reason why a horse may spook at something its rider remains oblivious to - they heard it and you didn't. Horses generally, as a result, dislike sudden sounds or high pitched sounds such as dog whistles. The cup-like shape of the equine ear is part of what makes their hearing so much better than ours, and their ability to turn and move their ears helps them locate the sound.
Some horses are more reactive to sound than others. A 'spooky' or 'flighty' horse is often one that pays more attention to unusual noises. For this reason, ear plugs are sometimes used on show horses. It is fairly common for racehorses to be equipped with ear plugs, as some horses will get distracted by the crowd noise in the final stretch and slow down. Ear plugs help them focus on the job of winning the race.
Horses, like humans, can suffer from age-related hearing loss, for which there is currently no treatment.
Ear Language
For humans, wriggling one's ears is a party trick. We have three muscles controlling our outer ears.
Horses have ten. The equine ear is one of the most expressive parts of the body. Much of a horse's mood is demonstrated by the position and attitude of the ears.
Flattened or 'pinned' ears are a sign of fear, aggression, or both. A horse that pins its ears at your approach is giving the same warning as a growling dog. Some horses learn to pin their ears to deliberately intimidate humans as a way of getting out of work.
Forward pricked ears mean happiness or alertness. They can also mean that the horse is paying attention to something or somebody in front of them. For this reason, people showing or photographing horses will sometimes make an interesting noise to get the horse's attention and bring its ears forward. It's standard procedure in the Arabian halter ring to keep a plastic bag in your pocket and crinkle it when the judge is looking at your horse.
When being ridden, a horse will often swivel its ears or keep one ear pointed back and the other forward. This simply means that the horse is listening to the rider, and there is a big difference between an ear that is turned towards the rear and one that is pinned.
Finally, floppy or drooping ears are a sign that should always be paid attention to. In most cases, drooping ears mean that a horse is tired and if a horse is falling asleep, its ears will often slowly dip. Drooping ears when riding may, thus, mean that you have worn the horse out and it might be time to stop. Drooping ears on a horse you are checking out for sale may mean it has been giving a sedative. Ace will often cause the ears to droop.
Drooping ears can also be a sign of unhappiness with a situation or overall depression. (Yes, horses can get depressed). Horses that are in poor condition may have drooping ears either because of muscular weakness or because of depression - if it's the latter, the ears will generally stand up straight just as soon as the horse realizes the hay isn't going anywhere.
Watching a horse's ears tells you what mood they are in and where their attention is.
Ear Health
Needless to say, a horse's ears are very important to the horse and the rider.
Age-related hearing loss seldom affects a horse's ability to work and be ridden. In fact, it's possible that the reason some spooky or flighty horses become quiet when they age is because they are going deaf and no longer hearing what was bothering them. Age-related hearing loss generally starts to become noticeable at about 15. It's possible to test a horse's hearing.
A deaf or hard of hearing horse should not be trail ridden alone, however, as they may not hear things coming and then may spook when they see them. Hard of hearing horses may also miss vocal commands given by a rider or trainer.
Horses can get ear infections, but it is very rare. Infections of the gutteral pouch can cause temporary hearing loss, but true ear infections are not common in equines the way they are in dogs and cats.
Far more common is parasitic infections. Ear mites often cause the horse to rub its head or ears, shake the head or become overall irritable. They are hard to properly diagnose as they tend to live right down in the ear and hard to treat. If you think your horse has ear mites, call the vet, who will sedate the horse and examine the ear canal. If mites are found he will recommend medication. This often only kills the adult mites and several treatments are normally needed to keep the problem from recurring.
Some horses are particularly bothered by blackflies or gnats around their ears. The best treatment for that is a fly mask with ear covers or wiping (not spraying) fly repellent onto the horse's ears before turning them out.
From: http://hubpages.com/animals/horsehearingandearlanguage