i notice that everyone responded with their own musical expertise.
i used to play viola, mostly by ear. i had a strange relationship with my sheet music in that once i had photographically memorized a piece, i could just as easily play it by ear and not need the sheet music. i don't know a thing about writing music and wouldn't know how to begin. i suppose i could ask my brother (he's been a musician since about age 8). i come from a musical family of sorts.
i remember reading in chris bourke's "something so strong" that while tim was receiving piano lessons and learning a lot of songs, neil would try to learn them as well, by ear.
it doesn't answer much, but there ya go.