Yes indeed. Fish have 6 senses, one more than we do. With us they share vision, hearing, smell, taste and touch, and in addition fish can detect low frequency vibrations and since they make use of this when swimming, it is a true sense.
The sense of smell in fish is termed the olfactory sense. The fish's "nose" does not communicate with the respiratory system as it does in us, but is solely used to dete4ct odours in the water. In many fish it is actually of higher use in finding food that their vision.
I'm not a biologist so I won't try to go into the details as to how this works. But it is fundamentally identical to us. In both cases, the odour has to dissolve into a liquid--in us, mucus in the nasal passages, but for the fish it is already dissolved in the water passing in through the nostril.
Taste is a bit different from us; some might say it is more advanced in fish. They have taste buds not only in the mouth as we do, but also in the skin covering the head, fins, body, barbels, lips and in anabantids (gourami, etc) at the tips of those filamentous ventral fins. Manhy catfish have taste buds on their flanks. All this means fish can "taste" food before it even enters their mouth. A combo of this plus the "smell" may be what Mikaila's rainbowfish detect.
I got the above from the book Advanced Aquarist Guide
written by Feroze Ghadially that I've had for years; it is wonderfully "simple" at explaining such things.