Pointer implements memory allocation in C++. Pointers store the address of a memory location rather than the data itself. Pointers allow indirect access to objects in memory and can be used to access data pointed to by the pointer through dereferencing. Pointer variables must be initialized with a memory address before dereferencing to access the data stored at that address. Passing arguments by value, reference, or pointer results in different behavior when modifying the arguments within the called function.