The following is a result of Zariski [Lemma 2.45 of Birational Geometry of Algebraic Varieties].
$X$ : an algebraic variety over a field $k$.
$(R,m)$ : a DVR of the quotient field $K(X)$ of $X$ with ${\rm tr}.\deg_k(R/m)=\dim X-1$.
$Y=\operatorname{Spec} R$, $y\in Y$ the closed point and $f:Y\to X$ the induced birational morphism (with $f(y)=x$).
Suppose $R\not\cong \mathcal{O}_{X,x}$.
Let $Z$ be the closure of $x$, $\pi_1:X_1\to X$ the blowing-up of $Z$ in $X$ and $f_1:Y\to X_1$ the induced map and $f_1(y)=x_1$.
By repetitions of this procedure, $R\cong \mathcal{O}_{X_n,x_n}$ for some $n$.
I can't understand the fact that "the above result shows that every divisor can be reached by a sequence of blow-ups".
In case $\phi:Y\to X$ is a birational morphism with exceptional divisor $E$, how can I apply above result to show $E$ is obtained by a blow-ups? What are $R,y,\dots$ in the above result?
This question is probably trivial but I'm confused anyway. I appreciate very much if you give any answer.