If you want to use notifications via e-mail you must configure the Outgoing E-Mail Settings in Central Administration.
To configure e-mail settings:
1. Navigate to “Central Administration → System Settings → Configure outgoing e-mail settings”
2. Provide a name of SMTP server
3. Provide “From address”
4. Provide “Reply to address”
5. Select “Unicode UTF-8” from the “Character Set” drop down list
6. Click OK
For configuring notification rules see Notification Rules.