What happens under the hood when an USB drive is inserted?

In Ubuntu 12.04 (Unity, and presumably Gnome Shell/Classic) automounting is handled by GNOME Desktop/Nautilus, which monitors DBus events for insertion, etc. The gvfs* backend is used, in co-operation with udisks for the low-level mounting, etc.

gvfs-mount is used internally, and running it in monitor mode with the -o switch will show, for example:

$ gvfs-mount -o

Monitoring events. Press Ctrl+C to quit.
Drive connected:    'usb Flashdisk'
Volume added:       'DISK_IMG'
Volume changed:     'DISK_IMG'
Mount added: 'DISK_IMG'
Volume changed:     'DISK_IMG'
Mount changed: 'DISK_IMG'
Mount removed: 'DISK_IMG'
Volume changed:     'DISK_IMG'
Drive disconnected: 'usb Flashdisk'
Volume removed:     'DISK_IMG'

GNOME deals with it. See https://help.ubuntu.com/community/Mount/USB.