Hello. RNAi is a new and emerging field in biology with some pretty neat theraputic goals. It is basically post transcritional modification. There are genes in the nucleus which can specifically code for small RNA's or the RNAs may be spliced out of another pre-RNA. There are two main RNAs that take part in RNA interference; siRNA (small interfering RNA) and miRNA (micro-RNA). siRNAs are transcribed from genomic DNA, and may be spliced out of the gene cluster they regulate. Each siRNA is complementary to a specific mRNA (which codes for a specific protein, transcription factor etc). As the siRNA is produced it is double stranded RNA but it is processed and translocated from the nucleus to the cytoplasm where it associates with a risc complex and binds to complementary mRNAs. When the risc-siRNA complex binds mRNA it causes its degredation and the protein which the mRNA coded for is not expressed. miRNAs are similar except they undergo different processing from their transcription to their binding to complemantary mRNAs. When miRNAs are first transcribed they are around 70nt in length (single strand) but this strand bends and is complementary to itself and forms a characteristic stem-loop structure in the pre-miRNA. This is then translocated to the cytoplasm and associates with the protein dicer, which cleaves the loop end of the mi-RNA this then acts much like siRNA, as in it associates with the risc complex and binds specific mRNAs although it causes translation blockage rather than direct degredation by siRNAs. miRNAs are around 25nt in length after all the processing. Also miRNAs tend to have alot more targets than siRNAs. miRNAs can bind to mRNAs if the mRNA is similar by a certain percentage. So if the mRNAs are a certain class of protein and the sequences are similar then a single miRNA may recognise both mRNAs.
EDIT: @ GI W "Small RNA molecules attach to DNA to prevent transcription of certain genes. These RNA molecules can be synthesized." - small RNA molecules actually attatch to mRNA and prevent translation of certain mRNAs.