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​​How does Nitrous Oxide help an Engine perform better?

When you heat nitrous oxide to about 570 degrees F (~300 C), it splits into oxygen and nitrogen. So the injection of nitrous oxide into an engine means that more oxygen is available during combustion. Because you have more oxygen, you can also inject more fuel, allowing the same engine to produce more power. Nitrous oxide is one of the simplest ways to provide a significant Horse Power boost to any gasoline engine.
­Nitrous oxide has another effect that improves performance even more. When it vaporizes, nitrous oxide provides a significant cooling effect on the intake air. When you reduce the intake air temperature, you increase the air's density, and this provides even more oxygen inside the cylinder.