Oxygen is one of the biologically most important molecules in the air we breathe.  The percentage of oxygen among the gases in air is 20% (other gases in air include carbon dioxide and nitrogen).

All of the cells in the body use oxygen to make the energy they need to reproduce, maintain their size, digest, excrete, etc.  Neurons need oxygen to generate the electricity they use to communicate with one another. 

When the amount of oxygen reaching cells from the blood goes down the cells cannot keep up with the demand for energy.  At a critically low level of oxygen the energy in neurons gets so low that there is no interneuronal (between neurons) electrical communication and the patient may lose consciousness.  At a low enough level cells cannot maintain internal fluid balance; there is swelling, failure of metabolism, and ultimately death.  If enough neurons in a functionally significant area of the brain die the patient will have a permanent neurological disability (ie: stroke).