It's fairly simple.
Basically the Water Blocks replace the Air Heatsink fans in order to cool the CPU, GPU, or both. Now it's just one big continuous flow of water
Pump -> Radiator -> CPU -> GPU -> Pump - This is if you do not have a Reservoir
Pump -> Reservoir -> Radiator -> CPU -> GPU -> Pump
Pretty much the water starts at the reservoir or the T-line (basically just a tube that's filled with extra coolant that's attatched somewhere in the loop to hold extra water (because water evaporates slowly and you need extra). you typically do not have to worry as much with a reservoir becasue they can hold a lot of extra water depending on size.
I'll pull a Pic you show you how it all flows if you need a picture layout
EDIT: I pulled Hockeygoalie's pic from the Watercooling pic thread, hopefully this answers your question, if not keep asking, we'll answer them