Using smells is one way writers can influence the images people form in their minds while reading. People encounter odors wherever they go, and associate their own experiences with the descriptive words they read. Certain ones will bring back fond memories while others may make readers feel sick. They can make a subtle statement about the characters, hint at the scenery, or clarify the setting.
If you write that the air was laden with the scent of jasmine, readers will envision a spring or summer evening in a warm climate, as jasmine release their scent after the sun goes down. Mentioning acrid or pungent odors will invoke different impressions than sweet or minty smells.
Characters might display an extraordinary sense of smell, as seen in the recent movie about Sherlock Holmes (which I liked) and also in one called The Book of Eli (that one was too violent for me). As some people have hyposmia, the reduced ability to detect odors, or anosmia, the complete inability to smell anything, you might use one of those medical conditions as an interesting flaw for a character in a story.
As with any description, you’ll want to be careful not to overload your story with unnecessary sensory details. However, sprinkling them throughout the story to give a richer picture of the setting or characters can be very effective.
What odors do you associate with pleasant memories? What about those that are unpleasant?