You may notice, when you hot-plug a USB mouse, that the light doesn't come on until a second or two after being plugged: part of the USB specification requires that a device declare how much power it requires before it actually powers on. This also allows for USB to actually tell you if a device needs too much power on the screen, rather than it just malfunctioning.)
So what happens is this: you plug in the mouse, the mouse's USB chip talks to the computer and says "Hey! I'm a mouse, model such-and-such, and I need the Generic HID mouse driver. I need 100mA of power. Hook me up!" The computer asks the hub to which the mouse is plugged whether there's enough power left, and if there is, the computer loads the driver and tells the mouse "Mouse! Thou art now connected! Power up and speak!" The USB chip in the mouse turns on the rest of the mouse, and it starts communicating with the computer. If there isn't enough power, the computer shows an error message on the screen ("There isn't enough USB power available, blah blah blah...") and tells the mouse "Sorry, dude. The hub says it doesn't have enough juice for you. Come back another time!" and the USB doesn't allow the rest of the mouse to power up.
tooki