Hey,
A quick answer :
Go look at www.3gpp.org to find out the skinny on it.
Explanation :
When you "compose" compose an SMS message on your phone - think of that as a custom app running in the phone.
The message is sent over a Control Channel (as opposed to a voice Channel) using a defined (by ITU) packet encoding.
The messsage then goes to your operators SMS-C (SMS Center) through the SS7 (Signaling) network. If you are sending it Mobile to Mobile it may be forwarded to another SMS-C through either proprietary protocols or SMPP (SMS over IP).
The SMS gets to email through a gateway provided by the operator. The same is true of AOL and IM to SMS.
One of the big aspects of SMS is the control the operator has over somebody using their infrastructure - you MUST set up a business relationship to hook directly into the SMS netowrk of an operator.
Does this help ?