Why is the digital frequency highest at $\pi$ and what does it mean in terms of analog frequency?
Check this figure.



Consider the signal $x[n]=A$ which is constant but can be written as $x[n]=A\cos(0n)$, so its frequency is zero. There is no oscillation.

Let's increase the frequency. For the signal $x[n]=A\cos(\pi n/4)$, it oscillates at frequency $\omega_0=\pi/4$. The oscillation frequency increases.

For the frequency $\omega_0=\pi$, the signal is $x[n]=A\cos(\pi n)=A(-1)^n$, thus the signal oscillates between $A$ and $-A$ for each pair of consequtive samples. You can see that the signal cannot oscillate at a higher frequency, there is no faster oscillation than this.

For frequency $\omega_0=7\pi/4$, the signal can be written as $$x[n]=A\cos\Big(\frac{7\pi n}{4}\Big) = A\cos\Big(2\pi n-\frac{\pi n}{4}\Big)=A\cos\Big(\frac{\pi n}{4}\Big)$$ which oscillates at a lower frequency. 

Finally, for $\omega_0=2\pi$, you have a constant signal again, no oscillation.

It is the nature of discrete time that introduces this effect.