Acids from plaque cause the loss of minerals from the tooth (a process called demineralization), resulting in tooth decay. The formation of small cavities, or carious lesions, can be reversed by remineralization-that is, the deposition of minerals into previously damaged areas of tooth. Topical fluoride (such as obtained from toothpaste or administered by your dentist), when applied frequently in low concentrations, increases both the rate of growth and the size of enamel crystals. The accelerated growth of enamel crystals within the demineralized lesions initiates reminerization of the tooth. Also, the larger crystals are less prone to future attack from the acids. Systemic fluoride--ingested fluoride (such as is obtained from drinking fluorinated water) that is absorbed mainly through the stomach and intestine into the bloodstream--helps to strengthen teeth while they are growing. The fluoride is carried to developing tooth buds, where the interaction with the developing crystals initiates the replacement of hydroxyapatite (the tooth enamel's normal crystalline composition) with fluorapatite (a related crystal which incorporates fluoride). Fluorapatite is more resistant to decay than is hydroxyapatite. Fluoride may also exert an influence directly on dental plaque, reducing the ability of plaque organisms to produce acid, although some dental experts dispute this claim. Most likely, fluoride works by a combination of these effects. But the remineralization effect of fluoride is of prime importance, because it results in a reversal of the early tooth deterioration process and it gives rise to an enamel surface that is more resistant to decay.

There is however, a down side to fluoride supplementation, as large quantities can be toxic and promote tooth discoloration. Human exposure to fluoride has mushroomed since World War II, due not only to fluoridated water and toothpaste, but to environmental pollution by major industries from aluminum to pesticides: Fluoride is a critical industrial chemical. The impact can be seen, literally, in the smiles of our children. Large numbers of U.S. young people - up to 80 percent in some cities - now have dental fluorosis, the first visible sign of excessive fluoride exposure. The signs are whitish flecks or spots, particularly on the front teeth, or dark spots or stripes in more severe cases. Excessive fluoride exposure can also lead to a type of fluoride-induced weakening of the bones and may increase the frequency of fractures and bone breakage. There is often observed a tight correlation between extremely advanced stages of dental fluorosis and overall loss of bone structural integrity. The lesson here is that too much of a good thing can be detrimental to your well-being so keep an eye out for the early signs of fluoride overexposure.

As you may already know cavities (holes) in your teeth are caused by bacteria that live in your mouth. When you eat, some food is left in your mouth and the bacteria eat it up. Unfortunately these bacteria produce small amounts of acids while they eat. Over time the constant exposure to weak acid is enough to make holes into your enamel (the hard outer part of your teeth).
The enamel is made of calcium in form of hydroxyapatite. When you have weak acids in your mouth the hydroxyapatite is slowly dissolved out of your teeth leaving little holes.
Now the fluoride in toothpaste or tap water reacts chemically with the calcium and replaces the hydroxyl molecules with fluor and forms fluoroapatide. This does not dissolve in acid. So the fluoride does not make the teeth stronger but it makes them resistant to acid so that the bacteria can not dissolve them and you wont get as many cavities.

Teeth contain a mineral called hydroxyapatite. The exact structure of this mineral is a little complex, but is basically composed of calcium, phosphate, and hydroxyl groups. Now, there are certain bacteria that are on your teeth produce an acid, and the amount of acid produced increases in the presence of sugar and carbohydrates (which is why dentists always tell you to eat less candy and tasty stuff!). The acid that is produced slowly dissolves the hydroxyapatite, resulting in pits in your teeth, or cavities. What the fluoride treatment does is replace hydroxyl groups with fluoride. The new "fluorinated" compound is much less soluble in acid, and hence less prone to forming cavities.