It's basically swirl, sniff and sip.
We're going to add an extra step by doing a "pre-swirl" sniff for the first couple times you do this. This way you can see the difference swirling makes.
When you've received a pour of a wine (or have poured yourself some wine at home) do this:
Get your nose in the glass and give the wine a good sniff. Remember what you smelled. Your nose should be in the top part of the glass opening rather than the bottom.
Give it a really good swirl. The swirling gets oxygen into the wine and helps open up the smells.
And see the difference from the first time before you swirled it. Remember I said sniff the top part of the glass not the bottom. Here's where you can try both for yourself to see why you smell the top.
Draw in some wine along with air. Again, the extra oxygen will give you more flavor.
Why so much emphasis on smelling? Most of what you get from wine (or food) is through your sense of smell. Your nose is very sensitive while your palate is only good for very basic things like sweet, salty, acidic, and bitter.
Sniff, swirl, slurp video:
Or if you want to really get nerdy about it, How to Smell Wine