When the PC is powered up, the 80x86 processor finds itself in real mode and executes the code at address 0xFFFF0, which corresponds to a ROM-BIOS address. The PC BIOS performs some tests on the system and initializes the interrupt vector at physical address 0. After that it loads the first sector of a bootable device to 0x7C00, and jumps to it. The device is usually the floppy or the hard drive. The preceding description is quite a simplified one, but it's all that's needed to understand the kernel initial workings.
The very first part of the kernel is written in 8086 assembly language (boot/bootsect.S). When run, it moves itself to absolute address 0x90000, loads the next 2 kBytes of code from the boot device to address 0x90200, and the rest of the kernel to address 0x10000. The message ``Loading...'' is displayed during system load. Control is then passed to the code in boot/Setup.S, another real-mode assembly source.
The setup portion identifies some features of the host system and the type of vga board. If requested to, it asks the user to choose the video mode for the console. It then moves the whole system from address 0x10000 to address 0x1000, enters protected mode and jumps to the rest of the system (at 0x1000).
The next step is kernel decompression. The code at 0x1000 comes from zBoot/head.S which initializes registers and invokes decompress_kernel(), which in turn is made up of zBoot/inflate.c, zBoot/unzip.c and zBoot/misc.c. The decompressed data goes to address 0x100000 (1 Meg), and this is the main reason why can't run with less than 2 megs ram.
Decompressed code is executed at address 0x1010000 [Maybe I've lost track of physical addresses, here, as I don't know very well gas source code], where all the 32-bit setup is accomplished: IDT, GDT and LDT are loaded, the processor and coprocessor are identified, and paging is setup; eventually, the routine start_kernel is invoked. The source for the above operations is in boot/head.S. It is probably the trickiest code in the whole kernel.
Note that if an error occurs during any of the preceding steps, the computer will lockup. The OS can't deal with errors when it isn't yet fully operative.
start_kernel() resides in init/main.c, and never returns. Anything from now on is coded in C language, left aside interrupt management and system call enter/leave (well, most of the macros embed assembly code, too).