Let me explain. Catnip is the name we give to a herb in the mint family. Although humans can't really smell it, cats can smell the catnip really well, which makes them go crazy for it.
There is a chemical called nepetalactone in the catnip that triggers the response in cats (they are sensitive to that chemical). Basically, cats love it! They will roll around on it, rub on it, kick at it, etc.