Crushing
The oil in olives is contained in special cells mainly in the pulp and pit. In the first stage of processing they are crushed to release the oil. During this phase, the oil and the water contained in the olives (50%) emulsify. The prolonged mixing of the paste, at a constant temperature, breaks down the emulsion and causes the minute drops of oil to combine into a large mass which will be more easily separated in subsequent phases. This operation is called kneading. 

Yesterday
The traditional crushing devices were made up of cylinders or circular millstones (molazze) that crushed the olives under their weight.
The first grinders had millstones that were moved by hand over a flat unattached surface. These were replaced by millstones rotating around a fixed base; an arrangement that lasted for more than 3,000 years. Only in recent centuries animal traction and water-power replaced manual operation.
Stone crusher - Western Liguria, 19th century
The picture shows an ancient crusher run by water and made up of two opposing millstones driven by a central driveshaft.

Today
Traditional millstones are still used in some olive mills, but generally they have been replaced by mechanical crushers. The latter consist of steel cylinders enclosed in a metal housing. The olives are fed between the cylinders that turn against each other at a speed of more than 1,800 revolutions per minute and crush them to a thick paste. Cooling water flowing in a jacket surrounding the cylinder housing maintains the paste at an optimal temperature for extraction of the oil. Excessive heat can compromise the quality of the oil.
Some very modern mills manage to reconcile requirements of modern processing with the advantages of older methods. In these mills, olives are crushed between two cylinders made from Norwegian granite, a rock that has a particular texture with carefully arranged grooves running along its surface. Crushing is carried out without altering the characteristics of the oil.
The kneading is done inside steel basins where the paste is mixed for long periods by special blades fixed on a worm gear. 
Modern olive mill
The photo shows a modern olive mill of the Fratelli Carli Corporation: a washer is in the foreground, behind it the roller grinder, followed by the kneader, the oil separator and the horizontal centrifuge.