Nitrous Oxide (N2O) is a molecule...
Nitrous Oxide (N2O) is a molecule formed of two nitrogen atoms and one oxygen atom. With heat, the molecules break apart into individual atoms, providing additional oxygen for the chemical reaction. Because more oxygen is present, more hydrocarbons must also be added, in the form of additional fuel injected into the engine. While the oxygen atoms are used in the engine, the leftover nitrogen atoms regroup to form nitrogen molecules (N2 , with two atoms) in their free state.
The ratio of nitrous oxide and gasoline added to the intake charge is obviously critical to not only good combustion (providing more power) but also engine life, as the sky-high combustion chamber pressures make detonation even more likely; even running a little bit lean (not enough fuel) can have catastrophic consequences for the internal engine components. Through charts supplied with most nitrous kits and a lot of dyno tuning, a good engine builder can find and maintain the optimum air/fuel ratio. The ideal ratio for best emissions on a normally aspirated engine is 14.7:1 (stoichiometric), but that is not ideal for making the most power and certainly not the best for a nitrous engine. Most engine builders running nitrous target an air/fuel ratio between 11.5:1 and 12.5:1 (normally considered rich). Other factors such as engine rpm and compression ratio also dictate the ideal air/fuel ratio.
Dry nitrous kits fall into two basic categories known as foggers and spray bars. Foggers use one or more nozzles and simply fog or spray the nitrous into the airbox allowing the engine to breathe in the nitrous. Spray bar kits use individual nozzles or lines that aim the spray of nitrous directly into the intake path of the throttle bodies. The only real limitation of dry kits on modern fuel injected bikes is the factory fuel system and its ability to deliver enough gasoline through the OEM fuel pump and injectors to maintain the proper air/fuel ratio. In the last few years, many sportbikes have come equipped with dual injectors per cylinder, resulting in even more injector capacity and tuning flexibility than in the past on single-injector bikes.
Controlling both sets of injectors for proper fuel mapping means a few extra parts, but it can easily be done. Many engine tuners use a pair of Dynojet Power Commanders, while others prefer a Bazzaz fuel controller that is capable of handling both sets of injectors. There are a few shops that also have the capability of cracking the factory ECU and reprogramming it to handle everything including multiple maps so that you can activate a special nitrous map (with extra fuel) at the same time you press the nitrous button on the bike. The Power Commander can also be set up to do this using Dynojet's multi-function hub kit.

An electrically actuated solenoid...

An electrically actuated solenoid determines how and when the nitrous oxide gas is unleashed through the four separate lines into the intake system.

This shows the "wet" nitrous...

This shows the "wet" nitrous systems' usage of two separate feeds for nitrous and gasoline into the nozzle that sprays the mixture into the intake tract. A "dry" nitrous system does not add fuel, as it utilizes the stock fuel system's injectors to provide the extra gasoline when the nitrous is sprayed.

Exemplifying the comparative...

Exemplifying the comparative simplicity of dry nitrous kits, this setup from Cycle Tricks of Orlando, Florida, uses a single spray nozzle for the nitrous oxide gas inside the bike's airbox for smaller nitrous applications.

For those who are adverse...

For those who are adverse to drilling into their bikes' cylinder head, a slightly more elaborate setup from Cycle Tricks employs a spray bar positioned directly over the intake velocity stacks (similar to the positioning of secondary fuel injectors) in the airbox lid.

The proliferation of fuel...

The proliferation of fuel controller boxes such as the Power Commander has significantly eased the process of adding the correct amount of fuel with the nitrous injection to avoid dangerous lean conditions.
Dry kits have several advantages over wet kits and they are important to consider if you are thinking about adding nitrous to your bike. First, dry kits are less expensive because they have fewer parts. Since the gasoline is handled by your bike's EFI system, a dry kit does not need a separate fuel pump or fuel lines. This means all you need is a bottle, nitrous lines, 12-volt solenoid, an activation switch, and you are done. Since it has fewer parts, it is also easier to install and is more reliable too. Most riders that are considering nitrous already have an aftermarket exhaust and a fuel controller at this point so no other parts are needed.
To compare the price of a typical wet nitrous kit vs. a dry kit, we spoke with Schnitz Racing (www.schnitzracing.com), one of the leaders in the dragracing community. Ryan Schnitz, a former pro NHRA and AMA drag racer as well as a member of the ECTA 200mph club, runs his own dyno service under the Schnitz Racing banner and has extensive experience including developing custom maps for both types of nitrous kits. Schnitz will be riding for HTP Performance in the MIROCK Real Street class this year on a Suzuki GSX-R1000 nitrous (dry) bike. In '09 this bike ran ETs in the 7.85 range with trap speeds as high as 175 mph. "On most modern sportbikes," said Schnitz, "we always recommend a dry kit. They cost less, are simple, easy to install, reliable and very safe up to the 30-40 horsepower range. Beyond 40 horsepower we start considering a wet kit." A wet kit for a four-cylinder sportbike runs $807.90 and a similar dry kit with a two-pound bottle sells for $369.95. Assuming you already have an EFI fuel controller, the dry setup costs less than half of a wet kit.