Aromatherapy is a range of practices that have in common the use of essential oils for therapeutic purposes.
Like most woo, aromatherapy starts with observable, real effects of smells on humans, and extrapolates and exaggerates into a whole range of treatments from the effective, to the banal, to the outright ridiculous. In fact this is even used to cure mild depression. This stuff is also being used to cure insomnia, anxiety, respiratory problems and even the victim of most of these alternative scams: cancer.
Most traditional aromatherapies are based on the idea that different aromas are helpful for different moods and emotional or mental needs.
In the first type, a therapist will suggest different oils or oil blends to balance the body's natural rhythms.
According to Quackwatch, Health Foods Business estimated that the total of aromatherapy products sold through health-food stores was about $59 million in 1995 and $105 million in 1996. 
It sells well because people like things that smell nice.
According to this pretty useless site:
- Cosmetic: pretty body care stuff with essential oils to ensure maximal emptying of pocket,
- Massage: sweet-smelling essential oils with a jerk hitting and punching your back, and
- Olfactory: the inhaling or diffusion of unessential oils.
A Better Alternative to the Alternative
Since the only thing it really has going for it is that nice smell, you can easily replace it with something else that smells good. Examples include: tea, gum tree leaves (only counts if you live in Australia cause they are flying everywhere there- joke), car air fresheners and a bunch of stuff that is far cheaper and potentially more useful. Heck even a book smells nice and it's practical too due to entertainment and/or informational purposes except that book. Oh wait book; equals actual work. "NOOOO!!!" says the lazy student. Better just WOMBAT it with aromatherapy.
- PubMed:Lemon oil vapor causes an anti-stress effect via modulating the 5-HT and DA activities in mice
- Adverse effects of aromatherapy: a systematic review of case reports and case series by P. Posadzki et al. Int. J. Risk Saf. Med. 2012 Jan 1;24(3):147-61. doi: 10.3233/JRS-2012-0568.
- Quakwatch on Armomatherapy