How exactly does fluthrin work? does it attack the nervous system of
insects or affect their respiratory function?

I even dont know what is meant by Fluthrin :) Sorry! I am unable to answer!
www.google.com

The "fluthrins" (cyfluthrin, fenfluthrin, etc.) are pyrethroids. The
principal mode of action of pyrethroids is to interfere with nerve
transmission, more specifically, by interfering with the sodium
channels in nerve cells.

http://www.ncbi.nlm.nih.gov/entrez/query.fcgi?cmd=Retrieve&db=PubMed&list_uids=2180183&dopt=Abstract

http://www.usyd.edu.au/pharmacology/pcol3001/PDF/20%20Pyrethrin%20Insecticides.pdf

http://www.ehponline.org/members/2004/7254/7254.html
(This article is primarily concerned with mammalian toxicity but does
state: "The primary mode of pyrethroid action in both insects and
mammals is disruption of VSSC function." VSSC is voltage-sensitive
sodium channel.)

http://www.entmclasses.umd.edu/peap/leaflets/pil42.pdf

If you need to see that the fluthrins are included as pyrethoids, the
structures of cyfluthrin and fenfluthrin are shown in some of the
above