The sense of smell is the most important of our senses for appreciating and enjoying wine, for a very high proportion of what we "taste" is in fact smelled. Just recall how little you can taste food or drink when you have a cold or a blocked nose.
The centre of the sense of smell, the olfactory bulb, is at the top of the nose. Molecules of smell (in vaporized form) find their way to the olfactory bulb via two routes: up the nostrils when we breathe in, and along the passage from throat to nose when we breathe out.
Don't smell too insistently for too long when trying to describe or identify odours in a wine glass. Instead, rest for a few moments and then sniff again. The olfactory bulb is rapidly tired; that is, it adapts quickly to what it senses so that the impact of a given smell soon diminishes. Equally, when away from the smell to which it has "adapted", it recovers rapidly.
The nose of a wine will vary in intensity and distinction according to its age, grape variety origin and quality, but it should always be clean — that is, free of unpleasant odours. "Closed" and "dumb" are used to describe a wine that does not yet smell of much, but which intuition or experience leads you to expect will become more expressive as it matures.
Aroma refers specifically to smells that come from the grape — fresh, fruity smells that you will experience principally in young wines.
Bouquet refers to the smells that develop as a result of wine being matured in oak casks, and from its subsequent ageing in bottle. These are generally softer, sweeter and more subtle scents.