From everything I've read, it seems tinnitus arises from an inappropriate brain reaction to hearing loss. Normally the brain just lets this loss go and stops producing a sound, but things like stress, medications, imbalances in your neurochemistry etc. may interfere with the normal brain reaction to sensory loss. This seems to be especially common if the hearing loss is sudden. It is like phantom limb pain.
The thing I still don't understand is why tinnitus is so permanent for many. I know it's true, but I just don't understand how it causes these permanent neurological changes.