Eucalyptol (also known as 1,8-cineole) makes up 80-90% of the essential oil Eucalyptus Globulus (84% of Eucalyptus Radiata) . It is also found in other essential oils in various quantities including rosemary, bay, roman chamomile, cajuput, fennel, hyssop, lavender, marjoram, nutmeg, peppermint, pine, sage, and tea tree.
Its main property is mucolytic meaning it helps to soften and reduce mucus making it helpful for colds/flu, coughs, catarrh, sinus congestion, and other respiratory problems. It does have many other properties as well. When tested for its antinociceptive properties (reduces the sensitivity to pain), its effect was comparable to that of morphine. (Liapi, C. et al., 2007). It is also anti-fungal, antiseptic, and an insect repellent (especially against mosquitoes).
Many sources state that Eucalyptol can be a skin irritant but research suggests that this is not the case and there has only been one documented case of skin reaction to this compound. Perhaps if you have sensitive skin and you are concerned just use a 2% dilution when using essential oils with a high percentage of Eucalyptol in.
Shirley Price's Aromatherapy Workbook: Understanding Essential Oils - From Plant to Bottle, Thorsons, 2000, p49, p 55-57.
Antinociceptive properties of 1,8-Cineole and beta-pinene, from the essential oil of Eucalyptus camaldulensis leaves, in rodents. (2007) Liapi C, Anifandis G, Chinou I, Kourounakis AP, Theodosopoulos S, Galanopoulou P. Planta Med. 73(12):1247-54
Ian Southwell, Tea Tree: The Genus Melaleuca, CRC Press, 1999. p179-180
Maria Lis-Balchin, Aromatherapy Science: A Guide for Healthcare Professionals. Pharmaceutical Press, 2006, p185