Why don't people know when they have halitosis?

Nose got used to it: A person's brain is more sensitive to "changes" in aroma and can "ignore" odors once he's smelled them for a while. Halitosis occurs for several reasons. Chemicals from some foods/drinks diffuse into the flesh in the mouth and throat. These chemicals (odors) keep coming out into the breath for many hours. Some foods/drinks cause odors when in the stomach. Some substances stick to the teeth.

Getting used to it: Bad breath is something that develops over time, so most people who have it have kinda gotten used to it as its developed. It's a slow change, kinda like the example of throwing a frog into a lukewark pot of water and slowly heating it up. Eventually you can get the critter up to a boil without him ever jumping out because he's slowly adjusted to the temperature (even though he can't survive it).

Can't smell: It is very difficult if not impossible to smell your own bad breath. The only way to really know is if other people tell you or offer you mints or gum a lot. The taste buds and olfactory sense are very closely related. The nerves of this system become desensitized to the smell and taste of the halitosis over time. A neurologist could probably explain it better, but in a nutshell you can't smell it.