Nitro beer is so-called due to the addition of nitrogen gas in the dispensing process. Special taps are used that infuse the ale with nitrogen, producing bubbles that are much smaller than those created by CO2 gas. The resulting brew has a persistently foaming head and a much smoother and creamier mouth-feel. Reducing the amount of CO2 also serves to unmask subtle flavors and aromas that would otherwise be overwhelmed by the CO2 carbonation.
The Nitro process is employed in an effort to mimic the experience of Cask Ale, which is dispensed by gravity without any propellant.
Critics of the practice say that the drinking experience is less desirable without the huge carbon dioxide bubbles bursting forth and releasing strong flavor and scent. The Nitro process does not work as well for IPAs because it reduces much of the awesome aroma expected with hoppy beers.
The Denver Post has a thorough overview of Nitro Beer.
