Catnip is a type of mint and rubbing or sniffing catnip gives them a sort of high (it is not dangerous though). It is not really known why it effects cats in the way it does, but it is due to a chemical called Nepetalactone that is released from the plant when a cat rubs, chews or otherwise "bruises" the leaves.
There is speculation that it may mimic a cat pheromone, but this has yet to be proven.
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Yes catnip makes cats go crazy, for the most part. My cat loves catnip so much that he likes to rub his face in it and try to eat it. It's so funny! I love giving it to him. When he has some he jumps really high after his toy mouse.
Here is an excellent infographic all about catnip to help you understand it better: http://www.catnipsum.com/sciency_stuff.html
Yes cat nip can drive your cat crazy. It depends also on your cat and what she/he likes. It shouldn't usually make your cat crazy.
There's a special chemical in it that cats like. Male cats like catnip better because the same chemical can be found in female cat urine.
The herb Catnip contains a chemical called nepatalactone. A similar chemical is also found in female cats' urine, and can make cats behave in a peculiar way.