Oxygen is required for your colonists to survive. They can hold a small amount inside their suits. Indoors, Oxygen Generators turn electricity and water into Oxygen.
Each interior structure and connection holds a percentage of oxygen. Each interior structure can have up to 23% level and requires at least 17% oxygen to stay outside the warning threshold. Colonists will actively avoid any structure or connection that is below the 17% limit, but will still cross those areas if necessary.
Colonists and Trees (at night) will drain oxygen from the structure they are currently in. Each Oxygen Generator will fill their own dome at a fixed rate, up to the maximum %. Other structures drain oxygen from any adjacent structure that has a higher level than their current one. Oxygen will thus flow from generators toward the rest of the base.
It is important to note that, even though you may have enough oxygen for your entire base, larger structures with lots of people in them, such as sleeping quarters with lots of bunks, use up the oxygen much faster in those particular sections & will leave that area with not enough oxygen; again even if you technically have enough oxygen for the entire base. If you notice certain sections going in the red, you can build another oxygen generator nearby those sections to ensure an adequate flow of oxygen to those areas.