I thought as a Diesel Mech and rebuilder of turbochargers I'd weigh in..... Nick Gully pretty much had it right except for the cooling statement, turbochargers never suffered a cooling problem. some are water cooled most are oil cooled. Pete Willis talked about "turbo superchargers" but i think what he really ment was a turbo compound. Steve Dickey (my brother) can explain those better as they were used in a lot of WWII aircraft. Turbo's use hot exhaust gas to to spin a compressor wheel on a common shaft and are altitude compensating. Early Turbos were not very effecient and turbine housing were too big to make good boost, black smoke from a diesel engine only means one thing, to much fuel for the available air but it takes excessive fuel to a point to make heat, gotta build a fire to make boost. The engine Technology Pete talked about was in the form of Boost compensator's, the injection system would be setup to deliver a small amount of fuel to get the fire going but not to much to make smoke, then as boost started to come up the compensator would allow more fuel. There's a Formula for matching a turbo to an engine, our shop was pretty busy awhile back, construction companies would get mini excavators take them up to Telluride and find out they had no power, we would match up a turbo for the engine get it installed and then they ran great. As long as the turbo was designed for the engine its almost impossible to overboost. The reason for putting a "Wastegate" on a turbo is to control shaft speed, this way you can design a small turbine housing (the hot side) so you make boost right off of idle but at higher rpm if you don't have a way of dumping or bypassing the hot exhaust gas away from the turbine wheel it will overspeed and usually the shaft twists in two.
souped up a Dodge pickup while back, guy wanted to weld the wastegate shut for maximum boost, told him not a good idea, he did it anyway, couple days later going up a hill heard a boom all the cars behind him dissapeared in the smoke, we took the turbo off, took the turbine housing off and the wheel fell out......... costly lesson.