There are many theories about the actual mechanics of hypnosis, and making sense of them can be a bit like playing Snakes and Ladders - you tend to end up back where you started a lot of the time. But before considering how hypnosis works, perhaps the first question should be does hypnosis work?
Decades of research and clinical trials have shown that hypnosis can be remarkably effective for a wide variety of conditions. To take a clinical example, a study published in the June 2007 Journal of Paediatrics showed that hypnosis produced a significant drop in the severity and duration of headaches in children, and even a drop in the frequency of the headaches themselves - something like 75%. In the non-clinical field, a University of Iowa meta-analysis by Frank Schmidt showed that hypnosis was three times more effective than nicotine replacement when it came to giving up smoking.
Theories as to how these results are achieved range from the idea that hypnosis produces changes in brain activity, to the idea that the subject is "method acting" the role of a hypnotized person, to the skeptical point of view that it's all down to the placebo effect (which, of course, raises the awkward question "how does the placebo effect work?"). All of these theories, however, are essentially saying the same thing - hypnosis works by communicating with the unconscious mind.
Conscious and unconscious are really just shorthand terms to describe the general characteristics of the human mind. The "conscious mind" is the bit where we tend to "live" - the bit you might think of as "you". If there's a little voice reading these words out loud in your head, that's the conscious mind talking. The unconscious mind is everything else!
The unconscious controls all of the autonomic processes that you don't have to think about - the heart rate, the blood pressure, tissue growth, cell regeneration, the immune system and so on. It's where our thoughts, memories and accumulated experience reside. It controls our emotions, our habits and our responses to the world.
In many ways, it creates that world for us. The unconscious mind handles about two million bits of sensory information every single second. The conscious mind deals with about seven. That means that the reality you're actually aware of from moment to moment has been brought to your conscious attention by the unconscious, in a sort of Readers' Digest version, choosing seven bits which it thinks are important from the two million it's just processed.
The conscious mind is more logical, critical and analytical - it's constantly making value judgments. If somebody was to say to you "you really should give up smoking, you know, it's terribly bad for you", you're highly unlikely to become a non-smoker on the spot. You're more likely to come up with a dozen, rational sounding reasons as to why you should carry on smoking, or you might tell them to shove off and mind their own business. Even if you do consciously accept that you should give up smoking, it's not the conscious part of the mind that's keeping the habit in place.
The unconscious part of the mind, on the other hand, is much more accepting. It's also quite literal and tends to take things personally, relating any information it receives to you as an individual. Hypnosis works by bypassing the critical conscious mind (usually through relaxation or linguistic techniques), and speaking directly to the unconscious in a language which it understands - pattern, association and metaphor.
As mentioned earlier, the unconscious mind is basically in charge. The vast majority of things that we do are unconscious, which we can be grateful for - if you had to consciously think about every single thing you did, you wouldn't do anything. However, it can lead us astray. Most problems are things that we've learned how to do at an unconscious level - we've just learned how to them in an unhelpful way.
Problems are often an attempt at a solution. This is true even for such apparently self-destructive habits as smoking. Many smokers start in their teens, when smoking is seen as a quick way to fit in, acquire adult status or generally appear cool. Through sheer repetition, the unconscious mind becomes convinced that smoking is serving a vital purpose - that it's "good " for you in some way.
Hypnosis works by updating the unconscious mind with new and more helpful information, like reprogramming a computer. It can be used to change associations, so that cigarettes, for instance, are no longer seen as "little friends", and are more realistically regarded as "toxic killers". It can also be used to mentally rehearse better ways of going about things, such as being able to deal with stressful situations without having to light up.
Since the unconscious mind controls our autonomic bodily processes, physical change can also be achieved through hypnosis. Pain control is a very good example. The mind alters our awareness of pain all the time - professional chefs, for instance, get burnt on a regular basis, but rarely notice it unless it's particularly severe. You'll have experienced this yourself if you've ever discovered a cut or a bruise and wondered how it got there. Physical events are still occurring, but the unconscious has relegated them to the 1,999,993 bits of sensory information you're not aware of every single second. Hypnosis can therefore be used to amplify that same response and apply it to a specific situation, such as the control of headaches.
Hypnosis works, then, by shaping our perception of reality by dealing directly with the unconscious mind, the seat of most of our problems, and most of our solutions too.