Rather than cut/paste and provide credits/refs, here are 2 (IMO Outstanding) links to information about what and how Grub works (LILO comes as bonus ). In other words: Everything you wanted to know about Grub but didn't know how to ask!! Also some very good information on what's going on for the whole Boot process...Enjoy (read, research, repeat!!)
http://www.ibm.com/developerworks/libra ... tload.html
http://www.dedoimedo.com/computers/grub.html