There are three points. First, nitrous oxide is comprised of 2 parts nitrogen and one part oxygen (36% oxygen by weight). So, it´s actually N2O, nuke... When the nitrous oxide is heated to approximately 572oF (on compression stroke), it breaks down and releases extra oxygen, but its not this oxygen alone which creates additional power, but the ability of this oxygen to burn more fuel. By burning more fuel, higher cylinder pressures are created and this is where most of the additional power is realized. Secondly, as pressurized nitrous oxide is injected into the intake manifold, it changes from a liquid to a gas (boils). This boiling affect reduces the temperature of the nitrous to a minus .127 Degrees F. This "cooling affect" in turn significantly reduces intake charge temperatures by approximately 60-75 Degrees F. This also helps create additional power. A general rule of thumb: For every 10 Degrees F. reduction in intake charge temperature, a 1% increase in power will be realized, which means that a 350 HP engine with an intake temperature drop of 70 Degrees F, would gain approximately 25 HP on the cooling affect alone. The third point, the nitrogen that was also released during the compression stroke performs an important role. Nitrogen acts to "buff or dampen" the increased cylinder pressures leading to a controlled combustion process.
Also nuke about what it could do to your engine: A kit that uses the correct factory calibration does not usually cause increased wear. Because the energy released in the cylinder increases so do the loads on the variuos components that must handle them. If the load increases exceed the ability of the component to handle them, added wear takes place. NOS kits are designed for use on demand and only at wide open throttle. Nitrous can be extremeny advantageous in that it is only used when you want it, not all the time. All NOS kits are designed for maximum power with reliability for a given application.