This article says inhaled catnip oil stimulates the olfactory bulb (not a surprise), which signals the amygdala and the hypothalamus in such a way that the response out of them is sexual. Middle cat is thus sitting in a bed of artificial cat pheromone that substitutes for his missing testicles. He is not so much getting high as getting off.
It also says 70 to 80% of cats react to catnip, but they don't start reacting to it until around 6 months, which we have noticed with little cat. We were afraid for a while we had a kitty who wouldn't benefit from our vast catnip patches.