Twilio Conversations enables unified spaces for users on different platforms to communicate, while Twilio Studio is a visual application builder that allows handling messaging flows without writing code. Integrating Studio and Conversations with SMS involves configuring the Default Conversations Service, associating a Twilio number with it, and setting up a Messaging Service to automatically create new Conversations for each unique sender. A Conversation Scoped Webhook Resource links the Studio Flow to the Conversation. The process also includes creating a Twilio Function to dynamically generate this webhook, configuring the Conversations webhooks, and accessing status callbacks and chat transcriptions through Functions.