The olfactory nerve (Cranial Nerve I) allows us to have the ability to smell. It is also the shortest cranial nerve and is one of two nerves that does not connect directly with the brainstem.
Along with giving us a sense of smell, the olfactory nerve also plays a role in our sense of taste. The reason is due to the olfactory receptors. The olfactory receptors have hair like structures that are able to react to the odors in the air and stimulate the olfactory cells. So when you are sick, food may sometimes be more bland because of your nose not have the full capability to sense the odors of the food.
When we lose our sense of smell it is known as Anosmia. This lose can be for a short period of time, permanent, or progressively decline. Lose of smell can happen for a number of reasons: as stated before, a cold can have temporary issues, head injury can lead to permanent loss, and a neurodegenerative condition which can lead to a slow decline.
So during the holidays, your nose will be the reason you can smell all the Christmas scented candles.