My understanding for Xenon is that it's huge electron shell means that it has an induced dipole in the presence of other dipoles in the body. It then affects receptors with dipole-dipole bonds.

I was also confused by Xenon working as an anesthetic, and found it interesting that it can interact with the body without forming chemical bonds. Doesn't work for the lighter noble gasses.

It is an extremely hard question to answer. Think about how hard it is to debug software, even though software is designed by humans, is intended to be readable by humans, and has tools to help us in analyzing it. Then think about how much harder it would be to understand a system that instead came about by billions of years of chance mutations building up to develop self reproducing systems that are not at all meant to be easily understood, and that follow much more complex rules (quantum mechanics) than binary computers do.

there’s a relevant xkcd, as usual: https://xkcd.com/2682/