Hypnosis -- or hypnotherapy -- uses guided relaxation, intense concentration, and focused attention to achieve a heightened state of awareness that is sometimes called a trance. The person's attention is so focused while in this state that anything going on around the person is temporarily blocked out or ignored. In this naturally occurring state, a person may focus his or her attention -- with the help of a trained therapist -- on specific thoughts or tasks.
How Does Hypnosis Work?
Hypnosis is usually considered an aid to psychotherapy (counseling or therapy), because the hypnotic state allows people to explore painful thoughts, feelings, and memories they might have hidden from their conscious minds. In addition, hypnosis enables people to perceive some things differently, such as blocking an awareness of pain.
Hypnosis can be used in two ways, as suggestion therapy or for patient analysis.
Suggestion therapy: The hypnotic state makes the person better able to respond to suggestions. Therefore, hypnotherapy can help some people change certain behaviors, such as stopping smoking or nail biting. It can also help people change perceptions and sensations, and is particularly useful in treating pain.
Analysis: This approach uses the relaxed state to find the root cause of a disorder or symptom, such as a traumatic past event that a person has hidden in his or her unconscious memory. Once the trauma is revealed, it can be addressed in psychotherapy.
source: http://www.webmd.com/anxiety-panic/guide/mental-health-hypnotherapy