Here is a detailed explanation:
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2129159/From the abstract:
During very low carbohydrate intake, the regulated and controlled production of ketone bodies causes a harmless physiological state known as dietary ketosis. Ketone bodies flow from the liver to extra-hepatic tissues (e.g., brain) for use as a fuel; this spares glucose metabolism via a mechanism similar to the sparing of glucose by oxidation of fatty acids as an alternative fuel. In comparison with glucose, the ketone bodies are actually a very good respiratory fuel. Indeed, there is no clear requirement for dietary carbohydrates for human adults. [...] Contrary to popular belief, insulin is not needed for glucose uptake and utilization in man.