If you eat lots of carbs (say more than 100g a day) then your brain is fuelled entirely by carbohydrates (it needs about 100-120g of glucose per day)

If you eat much less than 100g of carbs a day (say less than 50g) then your liver starts breaking down fat (to supply most of the energy for your muscles) and produces ketones as an alternative energy supply for your brain.

On very low or even zero carb diets, your brain can be fuelled about 75% by ketones, with the remaining 20 to 25g of glucose provided by gluconeogenesis (glucose made by the breakdown of protein and fat). This means that you don't acutally have to eat any carbohydrates to function properly (although doing so is neither practical or sensible).

So basically ketosis is a glucose sparing mechanism, where your body uses ketones and fatty acids to meet the bulk of its energy supply.

Capiche?

Very short version:

Ketones are a fuel source that is produced by your body when there is below a certain level of carbohydrates in your diet. They are are created by breaking down fatty acids, either from fat in your diet, or from your own body fat stores. Lowering your carbohydrate intake enough (often below 50 gms per day but for some people even lower) therefore makes your body start breaking fat for fuel. If calorie intake is below your needs then you will start losing weight as your body creates ketones for an energy source.

Ketosis is simply the state of producing ketones. It can take a bit of time (2-4 weeks typically) between starting to produce ketones and becoming keto adapted which is the point at which your body gets used to using ketones as fuel. That switch over period can be uncomfortable for many and is called the "low carb flu". Eating extra fat and salt helps.

Basically, your body can use either glucose or ketones as fuel. Our bodies evolved to use either depending on food availability. Ketones have a major advantage for overweight people in that we get to turn our stored fat as fuel. And there are other advantages for treating conditions such as epilepsy, depression etc.

What are ketones?

Ketones are the byproducts of fat metabolism in the liver. The three "ketones" we make are: acetone, acetoacetic acid, and beta-hydroxy-butyric acid. (Though beta-hydroxy-butyric acid technically isn't a ketone.)

Acetone (top) is a waste product, cannot be used for energy and is responsible for the characteristic smell of ketosis. It's what you test for in your pee with keto strips.

Acetoacetic acid and beta-hyroxy-butyric acid (middle and bottom) are what you can utilize for energy.

Try http://www.amazon.com/The-Art-Science-Carbohydrate-Living/dp/0983490708