from the point at which you press the power button, which kernels / images are running
In normal circumstances, the kernel will be loaded from uImage.buffalo and the initrd (initial ramdisk) from initrd.buffalo, both on the first hard disk partition. Abnormal circumstances would include TFTP booting (loading those two files over the network), or the bootloader being configured differently.
when control is handed over, what EM "actually" is (in software) and where it is (in the hardware), etc
When the bootloader loads and initializes the kernel, it also populates an initial filesystem in memory (a "ramdisk") with files contained in the initrd.buffalo file. It then passes control to the init script contained in this ramdisk. Normally this init script will pass control directly to the init process on the hard disk and booting will continue from there. EM mode is a special case, where instead of switching to disk the init script boots a minimal system in the ramdisk environment. The ramdisk (EM mode) system is independent from the main one - changes made to one won't affect the other, and changes made to the EM mode filesystem will be lost on shutdown or reboot, since they are made only in memory.