The Network Mode of Operation (NMO) is also sometimes referred to as Network Operation Mode (NOM). The Network Modes have different values and interpretation in UTRAN and GERAN
In both the cases the Operation modes is decided based on the Gs interface between the CS CN (core network) a.k.a. MSC and the PS CN a.k.a. SGSN
In UTRAN:
Network Operation Mode I (NMO-I) is used when the Gs interface is present. In this case during the registration a Combined Attach (includes GPRS Attach & IMSI Attach procedures) procedure can be performed. A GMM Attach Request message with the attach type set to Combined Attach is used. Upon completion of this procedure, MM Status is IMSI Attached and GMM State is Attached.
In Network Operation Mode II (NMO-II) the GS Interface is not present. So the GMM attach procedure and the IMSI Attach (via Location Update) has to be performed seperately. This causes additional signalling.
Basic air interface signalling in case of NMO2 is shown
here.
In GERAN:
Network operation mode 1. A network which has the Gs interface implemented is referred to as being in network operation mode 1. CS and PS paging is coordinated in this mode of operation on either the GPRS or the GSM paging channel. If the mobile device has been assigned a data traffic channel then CS paging will take place over this data channel rather than the paging channel (CS or PS).
Network operation mode 2. The Gs interface is not present and there is no GPRS paging channel present. In this case, paging for CS and PS devices will be transferred over the standard GSM common control channel (CCCH) paging channel. Even if the mobile device has been assigned a packet data channel, CS paging will continue to take place over the CCCH paging channel and thus monitoring of this channel is still required.
Network operation mode 3. The Gs interface is not present. CS paging will be transferred over the CCCH paging channel. PS paging will be transferred over the packet CCCH (PCCCH) paging channel, if it exists in the cell. In this case the mobile device needs to monitor both the paging channels.
The Gs interface, has a number of subtle but important advantages:
During an ongoing GPRS / EDGE data transfer (TBF established), mobiles can't detect incoming voice calls and SMS messages as they are focused on receiving packets and thus can not observe the paging channel. In NMO-1, the circuit switched part of the network forwards the paging message to the packet switched side of the network which then forwards the paging message between the user data blocks while a data transfer is ongoing. Mobiles can thus receive the paging message despite the ongoing data transfer, interrupt the session and accept the voice call or SMS.
Location/Routing area updates when moving to a cell in a different location/routing area are performed much faster as the mobile only communicates with the packet switched part of the network. The packet switched network (the SGSN) then forwards the location update to the circuit switched part of the network (to the MSC) which spares the mobile from doing it itself. This is especially important for ongoing data transfers as these are interrupted for a shorter period of time.
Cell reselections from UMTS to GPRS can be executed much faster due to the same effect as described in the previous bullet. Whithout NOM-1 an Inter RAT (Radio Access Technology) cell reselection with Location and Routing Area update requires around 10 to 12 seconds. With NOM-1 the time is reduced to around 5 to 6 seconds. An important difference as this reduces the chance to miss an incoming call during the change of the radio network. Also, ongoing data transfers are interrupted for a shorter time,an additional benefit that should not be underestimated.
This informative slide shows the number of years it takes after the technology is launched to reach the peak volumes. Though we know this to be true for the 1G and 2G systems, I find it difficult to believe the same would be true for 3G and 4G systems. 
