The LaTeX command typesets a file of text using the TeX program and the LaTeX Macro package for TeX. To be more specific, it processes an input file containing the text of a document with interspersed commands that describe how the text should be formatted. It produces at least three files as output:
xdvi, which actually uses the `.dvi' file.
For a description of what goes on inside TeX, you should consult The TeXbook by Donald E. Knuth, ISBN 0-201-13448-9, published jointly by the American Mathematical Society and Addison-Wesley Publishing Company.
For a description of LaTeX, you should consult:
LaTeX: A Document Preparation System, by Leslie Lamport, ISBN 0-201-15790-X, published jointly by the American Mathematical Society and Addison-Wesley Publishing Company, 1985.
LaTeX for Engineers & Scientists, by David J. Buerger, ISBN 0-07-008845-4, McGraw-Hill, 1990.
The LaTeX Cookbook, by F. Teagle, Informatics Department, Rutherford Appelton Laboratory, Chilton, Didcot, Oxon, OX11 0QX, 1991.
LaTeX for Everyone, by Jane Hahn, available from PCTeX in California, and from the TeX Users Group, 1991.
LaTeX Line by Line: Tips and Techniques for Document Processing by Antoni Diller, Chichester: John Wiley and Sons, 1992.
A Guide to LaTeX, by Helmut Kopka and Patrick Daly, Addison-Wesley, 1992.