What does catnip do?

I just got my first cat (He's fucking adorable btw) and I got him some cat nip toys and he goes nuts. I know that catnip is like kitty-crack, but what is it doing to him/why does it make him react that way?

Also, secondary question, is a cat licking me the same as why a dog licks you? Like a sign of affection? Because he likes licking my face and will trap my hand and lick me when I give him belly rubs.