Spode's Abode's Basic Gudie To Watercooling
 

"Every watercooling system works on the same basic principle, it takes the heat generated at the component to be cooled, transports it from the general vicinity and then dissipates it into the atmosphere. An air cooled heatsink works in just the same way but just cannot utilise such a large (and therefore efficient) surface to dissipate the heat. If you would like to know the science behind this rather than taking my word for it there will soon be a follow up in depth article on all the theory behind watercooling."

More info is availible Here.

i like the diagrams
very easy to understand