Recent work by Buck and Axel suggests a large family of receptor proteins. Humans can smell thousands of compounds in the MW range of 100 - 300. This leads to a wide variation in smell qualities.
Different compounds have different potency - some have very low thresholds.
As in taste, adaptation, mixture inhibition and release effects occur. Adaptation - decrease in responsiveness under constant stimulation. Release from inhibition - when one odor in a mixture is adapted, the others may seem stronger. Olfaction is poorly connected to verbal processing - emotional tone and physical reaction are its functions.