It is very dangerous to inhale nitrous oxide directly from the canister, and doing it in an enclosed space is also very dangerous.
Never place a plastic bag over your head.
If you take too much nitrous oxide you risk falling unconscious and/or suffocating from the lack of oxygen. People have died this way.

Other risks include:

Dizziness, which might make you act carelessly or dangerously.
Heavy regular use of nitrous oxide can lead to a deficiency of vitamin B12 and to a form of anaemia. Severe B12 deficiency can lead to serious nerve damage, causing tingling and numbness in the fingers and toes. This can be very painful and make walking difficult.
Regular use can stop you forming white blood cells properly.
It can be hard to judge the amount to use safely. If you have too much you can end up fainting, having an accident or worse.

Nitrous Oxide Awareness