Smell is detected by a sheet of cells in the olfactory epithelium. The cells that detect smell are called olfactory receptor cells and they are the only neurons in the nervous system that are continuously regenerated throughout one's life (they have a life span of 4-6 weeks). The axons of olfactory receptor neurons go up into the olfactory bulb where they synapse and converge with second order olfactory neurons. The axons of the second-order olfactory neurons form the olfactory tract which projects into the brain. The olfactory tract relays information to many structures in the brain - the cerebral cortex, the thalamus, hypothalamus, amygdala, the neocortex and others. The olfactory bulb is also part of the limbic system, which is important in emotion and memory, which explains why certain smells can evoke certain memories. (I've often wondered if I study in the presence of a certain smell, then take the test with that smell present, if I'd do any better.)
Our textbook covered a small section on pheromones which are chemical substances that are consciously undetectable, that in other animal species are known to control behaviors such as mating, stalling or promoting sexual development, identifying young and marking one's territory. They are detected by a tiny cavity known as the vomeronasal organ, which is present in animal species, but controversy exists as to whether human have this pheromone detecting organ. Research for my web project seems to indicate that its not clear whether human pheromones exist but that the existence of chemicals called androstenes and copulines found in our body fluids can have effects on humans that are similar to the effects that pheromones have on animals. This is a pretty interesting idea. If human pheromones do exist they may be able to explain a lot about human behavior and emotions. For example, love at first sight - the other person might release pheromones that make you feel good. Another example, that person that you don't like, for no good reason, they just give you bad vibes - maybe they're releasing bad vibe pheromones!