According to the label, it ensures a deep sleep, but may affect your health. Use when your nightmares rise too high.
This is one of the Curiosities available in the Bazaar put may also be given as a reward for some actions or Opportunity Cards.
Laudanum has a different effect early in the game (in "Part One") than later in the game (after you have become A Person of Some Importance in "Part Two") Be careful.
"Part One" choices
Early in the game, laudanum is a convenient, if somewhat dangerous, tonic.

Employ F.F. Gebrandt's Superior Laudanum
F.F. GEBRANDT'S. FOR PAINS, NIGHTMARES AND DISLOYAL THOUGHTS.
Drink before taking to your bed
F.F. Gebrandt's justly celebrated mixture ensures a deep and restful sleep, and assists with persistent nightmares; but it may also affect your health.
unlocked with F.F. Gebrandt's Superior Laudanum 1
"Part Two" choices
Once you have become A Person of Some Importance, there are more risks to using laudanum.

Employ F.F. Gebrandt's Superior Laudanum
F.F. GEBRANDT'S. FOR PAINS, NIGHTMARES AND DISLOYAL THOUGHTS.
A familiar sensation
One takes to one's laudanum to ease the pains of sleep. When one has seen and done as much as you… those pains grow more acute.
unlocked with F.F. Gebrandt's Superior Laudanum 1, A Person of Some Importance 1The search for sweet white sleep
The dreams boil close to the surface even in the day-time. Perhaps F.F. Gebrandt's finest will quell them.
Unlocked with Indulging a A Less than Laudable Laudanum Habit 3Quite the enthusiast!
Down the hatch! Delicious! Constipation? Jaundice? That bloody headache? All those things, yes, but at least it will guarantee you some sleep.
Unlocked with Indulging a Less than Laudable Laudanum Habit 5, A Person of Some Importance 1Laudanum.
Just a drop more.
Unlocked with Indulging a Less than Laudable Laudanum Habit 8
Indulging a Less than Laudable Laudanum Habit
Using too much laudanum may become habit forming. The following Opportunity Cards appear when your Indulging a Less than Laudable Laudanum Habit Quirk Quality rises.

A day without laudanum
Over time, your desire for laudanum dimishes…
Auto-fire
Unlocks with Indulging a Less than Laudable Laudanum Habit 1
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Lose: 1 x F.F. Gebrandt's Superior Laudanum
Hedonist increase