Basically when you first start using linux you will notice that when you boot, you boot into a text command prompt. You'll see a logon prompt and then a password prompt. After you enter a valid name and password you end up in your home directory. The reason for this is based on the various runs level that linux can boot into. Run levels are defined in /etc/rc.d, here you will find runs levels defined rc0.d through rc6.d. If you look in these directories you will see that there are links to scripts that call specific daemons. An example is the gpm daemon which runs at boot for your mouse along with many other daemons.
These run levels define what is to load on startup, currently if you boot into a text prompt you are probably in runlevel 3. An excellent graphical way to see this is to launch the control panel and then the runlevel editor. Here you see what daemons are loaded. If you want to boot into a graphical logon and Xwindows you need to boot into runlevel 5 as this provides the necessary daemons to boot into graphical session. Did you know that at a lilo prompt you have the option of typing linux 5 or linux 3 (the default)? Try it on your next reboot. You can also make a certain run level your default startup hence this section which shows you how to make this so.
To boot into the graphical logon and xwindows automatically
you simply need to edit your /etc/inittab file. You can also see here what
certain runlevels provide. Notice that the default is id:3:initdefault:
. This defaults you to runlevel 3. To always boot into xwindows simply
change this line to read id:5:initdefault: . That's it your done. One last
thing I will mention is the /etc/rc.d/rc.local scripts. You can put commands
in here that will run after all of the other daemons are loaded. An good
use of this is put you firewall script in here so that it launches after
everything else. But why not just stick your commands in the default runtime
routines? Good question. The people who designed linux and its run levels
are very smart and made sure that pretty much no matter what you will be
able to logon to your system. If you put a command in say runlevel 3 that
hangs your system there is no way to logon and wouldn't that suck. Note
that if you do find yourself in this situation you can usually type linux
1 at the lilo prompt to boot in single user mode to fix your problem.