Basically, breathing in tobacco smoke irritates the lungs. This can happen to an extent when you are sitting in a confined space with someone who is smoking. Obviously the irritative effect is much greater when you are the one smoking. You are breathing in a substance that the lungs can't quickly rid themselves of. Smoking can destroy your lungs and lung tissue, decreasing the number of air spaces and blood vessels in the lungs.
The result is less oxygen to critical parts of your body which means that healthful flow of oxygenated blood is impaired. The respiratory system has a branching set of air spaces, near the pulmonary capillaries. Air space is exchanged around 10 to 15 times a minute. In smokers, this vital function is hindered. Even after decades without smoking, the damage caused by earlier smoking can have harmed the lungs.