Methylammonium lead-iodide (CH3NH3PbI3, hereafter referred to as MAPbI3) perovskite has emerged as a dazzling nova in the solar cell realm. To date, the surface physics of these materials is still puzzling, but in this work, we demonstrate that the optical dynamics in MAPbI3 is primarily determined by the surface states. Pb dangling bonds on the surface of MAPbI3 introduce shallow electronic states. The carrier localization effect for these electronic states is rather weak as the lifetimes of the carriers on the iodine-poor surface are comparative to those in the interior region of MAPbI3. In contrast, rich-iodine on the surface of MAPbI3 induces deep trap centers for the carriers, which are detrimental to long carrier diffusion lengths. It is further proved that the surface passivation, which surprisingly prolongs the carrier diffusion lengths, mainly works on the rich-iodine on the surface rather than the Pb dangling bonds. This better understanding of the surface physics could provide essential information for improving the performance of photoelectronic devices based on MAPbI3 perovskites.