Nitrous is a more flamable type of gas/liquid which goes into your fuel chamber and there the spark plugs ignite the flamable liquid/gas and cause the pistons to hit much harder due to the larger explosive which gas could not do.
You have to have special seals / rings / pistons to use Nitrous otherwise your pistons will break aswell as your engine seals because it was not made for such a gas.
Also, the flame does come out tailpipe but I can't see in my mind how it could melt fiberglass on that car :/