I borrowed this from another site, might make a good sticky as good newbie info.

Chemical Properties

A nitrous oxide molecule is made up of 2 atoms of nitrogen and 1 atom of oxygen. By weight it is 36% oxygen (air is only 23.6% oxygen). At 70° F it takes 760 psi of vapor pressure to hold nitrous in liquid form. The critical temperature is 97.7° F; at this temp the vapor pressure can no longer hold the nitrous in liquid form. At this point the nitrous turns gaseous and will be at 1069 psi. As temperature rises further, so will pressure, but it will remain in gaseous form. If you intend to siphon liquid nitrous, it is important to keep the temperature below 97.7°. When liquid nitrous is released, it will go from 760 psi to 14.7 psi (normal atmospheric pressure). It will then begin to boil and rapidly expand; the pressure drop will cause the temperature to decrease. Nitrous boils at 129.1° below zero.

Combustion

Nitrous oxide does not burn, it is an oxidizer. It provides more oxygen, so more fuel can be burned, and the result is more power. The atoms in a nitrous oxide molecule are bonded together. The oxygen is not free, but fortunately the bond breaks down as temperature rises. At 565° F, the bond is broken and the oxygen is then free. Combustion temperatures are much more than 565°, so it's not a problem. By adding nitrous oxide to an engine, the total amount of oxygen is increased and other gasses that do not support combustion (mostly nitrogen) are decreased. This speeds the burn rate and requires less timing advance for peak output. It is hard from many people to grasp gaining power with less timing, but it's a fact. Peak cylinder pressure must occur at approximately 20°ATDC to make peak power. If you speed the burn rate, peak cylinder pressure will occur too soon. It is easy to run too much ignition advance with nitrous, but too much will not only hurt power, it can quickly bring a nitrous engine into detonation and destroy it.

Detonation

Nitrous will increase the chance of detonation. To keep the engine out of detonation, you must control the extra heat that nitrous makes. The easiest way to do this is to add more fuel. All nitrous systems come with rich jetting to give you a safe starting point. The extra fuel takes away heat and raises the detonation limit. Another way of controlling heat is with water injection. A well set up water injection system will allow you to run the chemically correct nitrous to fuel ratio, so the system will be more fuel-efficient. If you don't try to over do it, and keep the hp levels within reason, running slightly richer should be all you'll need to control detonation. Water injection and running richer will both reduce the power output, but raising the detonation limit will allow more nitrous to be used to get more power.

Nitrous-to-fuel Ratios

The chemically correct nitrous to gasoline ratio is 9.649:1, but that is too lean to run safely. The chemically correct air to gasoline ratio is 14.7:1, but at wide open throttle, we cannot run that lean without going lean. The problem is that every bit of oxygen does not find and mix with every bit of gasoline. Same goes for nitrous, you need a richer mixture to better the chances of the nitrous mixing with fuel. If a nitrous engine runs lean, it can destroy the engine in a matter of seconds. There must be enough fuel for the nitrous to react with, if there isn't, temperatures rise rapidly. The oxygen that couldn't react with fuel will oxidize any parts that get hot enough, and the next thing in line to burn is aluminum, so don't run lean.

Plate Systems

The most common systems are the spray bar type. A plate gets sandwiched between the carb and manifold. There are two spray bars in each plate, the upper one is nitrous oxide and the lower one is fuel. The nitrous sprays over the fuel to give a better nitrous fuel mixture. Plates are easy to install and provide good performance, but they are not the best. The nitrous must travel through the entire intake manifold. The longer it takes to get to the cylinders, the more it expands. The more room that nitrous occupies, the less of the normally aspirated mixture the engine will get. So the engine will make more power if the point of injection is as close to the cylinders as possible. Another problem with spray bars is when using larger kits; the motor will hesitate slightly when the nitrous is activated. When the nitrous first travels down the spray bar, it hits the dead end of the bar and sends a pulse backwards, which impedes flow. Once the system is running there are no problems, but that slight hesitation could cause tire spin. This reversion is mostly a problem on larger kits, around 300 hp or so.

Nozzle Systems

Also known as foggers (started by NOS Systems), the nozzle nitrous systems can produce much more power without any reversion problems. With this type of system, you must drill and tap each intake runner near the cylinder head and run at least 1 nozzle for each cylinder (many multiple stage systems will run more than 1 nozzle per cylinder). There is much more plumbing in a nozzle system, but they give better mixture (or fog), because the nitrous and fuel mix before they are injected. The high pressure nitrous breaks the fuel into a very fine mist. The point of injection can be very close to the cylinder for minimal expansion. In many cases, depending on how the nozzles are situated and aimed, the normally aspirated airflow will increase. So there are many advantages to the nozzle systems.

Cooling Effects

Cooler intake air is denser and contain more oxygen atoms per cubic foot. So cooler air will allow more fuel to be burned and intern make more power. A 10 degree drop in temperature can add 1 to 1.5% power to an engine. Nitrous oxide boils at -129°F and it will begin to boil as soon as it is injected. This can cause a 80° or so drop in manifold air temperature. Now if we are dealing with say a 400 hp engine, we can see well over 30 hp gained from the cooling effect alone. This cooling effect also helps the engine deal with detonation.

Average Power

If you were to build a 550 hp 350 Chevy, it would have to rev to 7000+ rpm to make that kind of power and only make power in a narrow rpm range. A nitrous injected 350 Chevy making 550 hp would make that power at a much lower rpm and higher average horsepower. So the nitrous engine will out perform the normally aspirated engine by a healthy margin. The reason is that nitrous flow remains constant no matter what rpm the engine is at. At lower speeds there is more time for the nitrous to fill the cylinders, so you get more nitrous in the cylinders per power stroke at lower rpm. This will boost power more at low rpm (before the engine is in it's power band). As rpm increases, and gets in the power band of the engine, you will get less nitrous per power stroke, but the engine will start making more normally aspirated power. This really flattens out the torque curve and widens the power band.

So Why Not Pure Oxygen?

Air has only 23.6% oxygen by weight, the rest is made up largely of nitrogen. That nitrogen does not aid in combustion at all, but it does absorb and carry heat away. When you add nitrous, it has 36% oxygen with the rest being nitrogen. So the more nitrous oxide you add, the less percentage of nitrogen is available to absorb heat. That is why nitrous increases engine heat very rapidly. If we were to add pure oxygen (which has been tried), the percentage of nitrogen would fall much faster as more oxygen was added. We would not be able to add much oxygen before heat was a problem to control. Also compressed oxygen is in a gaseous form, so adding oxygen takes up more room and reduces normally aspirated power, and the amount of nitrogen from it. By injecting liquid nitrous, the normally aspirated power only drops slightly and it is adding oxygen and nitrogen. To put it simply, with nitrous oxide, we can get more oxygen atoms in the engine and have a lot more nitrogen as well. Nitrous can make much more power before heat is uncontrollable.