muscle memory. its muscle memory for each note, which is how people sightread, however if you aren't as familiar with say higher notes because they're less common, you wont be able to sightread it as easily. similarly, when learning pieces, first we sightread, then the notes of the pieces become muscle memory. so even if there are notes that are super high or something we arent as familiar with, we can play it easily. tldr; more practice = know where notes are better

it's years and years of perfecting where to put your finger (intonation) and then committing that to memory. When you start learning to play, it's hours of playing scales in first position and making minor adjustments as to not be sharp/flat. With proper hand placement and technique, it's a lot easier to consistently place your fingers in the "right" place, though.