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The Neurotoxin Generator is a massive cylinder housed within a large room. Eight large hoses attached to it allow the gas contained within to be distributed through the Aperture Science Pipe Network to any location throughout the facility. Its storage capacity is presumably large enough to cover the entire facility, which is how GLaDOS killed all the employees.
The Neurotoxin Generator is the second objective in Chell and Wheatley's plan to nullify GLaDOS' defenses. After disrupting the turret production lines, Wheatley and Chell make their way to the generator, which Wheatley then attempts to "hack". As he has no idea what he's doing, Chell has to disable it by using portals and a Thermal Discouragement Beam to sever the hoses. This causes the pressure within the container to drop to "Dangerously Unlethal levels". The container then implodes and falls apart. Subsequently, a vent on a nearby wall breaks open, drawing in Chell and Wheatley.
Despite the Neurotoxin Generator being completely destroyed by Chell and Wheatley early on in the game, Wheatley is still able to use Neurotoxin in the final battle. It's possible that he somehow managed to manufacture his own neurotoxin from somewhere unseen.
Neurotoxin is in fact nerve poison, meaning it could paralyse or instantly kill a person.