We recently wrote a brief how-to article explaining how to set up the iPhone remote which controls iTunes and Apple TV wirelessly. However, lots of people still had questions.
That being said, check out this Remote how-to video:
The pass code in the Remote app and in iTunes should match (ours did not because we had multiple takes to show the device loading in iTunes)
See our other post with step by step written instructions: How To Configure The iPhone Remote To Work With iTunes