To be honest, it's not a real word, but it is made up of letters and letter-combinations that, when pronounced with their English-usage sounds, or at least one of them in each case, form the sound "fish"!
The word is split up as follows:
GH - O - TI
And this is how we get the sound of "fish":
GH: is often pronounced as an f in English. For example, rough or enough (though not, of course, through or even ghost!);
O: when the o in the word women is pronounced, it sounds like the i in thin and, I think, the i in think, though not at all like the i in mind (we shall ignore the i in wind (to turn a key or a handle, for example), unless one means wind (a strong breeze);
TI: motion, recognition, action, and many other words contain the ti combination that sounds just like sh. Neither of the tis in repetitive are pronounced this way: the repetition would be exhausting.
So that's how a ghoti is really a fish.
And talking about long words, what's the longest word in the English language? Well, some might say it is antidisestablishmantarianism, whereas others would argue for floccinaucinihilipilification, but, as schoolboys we all knew that the very longest word was, of course, smiles.
There is, after all, a mile between the first and last letters.