How does Co2 cause damage to the equipment? Above and beyond that caused by any fire/smoke damage?

If applied manually via an extinguisher, in maybe an enclosed/low ventilated computer server room, oxygen depletion is a considertation for the user of the extinguisher.

Or is it an automatic fire suppression system?

Isolate the power and then Co2 would be my choice :-)

As for damage to equipment, that would be the last thing I'd worry about.

Call me old fashioned if you like but in my opinion and experience CO2 is the best hand held extinguisher for electrical/electronic fires such as PCs.

As previously written damage to equipment is the last thing to worry about.

If a single PC starts to smoke then fire the CO2 through the vent slots, not too much, the fire should die and smoke stop issuing.

Sound the fire alarm, evacuate the room at least, then call the fire and rescue service, tell them what has happened and what you have done.

If more than a single PC is involved, or the fire is inside a server room and if you have total flood system do not enter but sound fire alarm etc.

I haven't heard of CO2 causing damage to a PC but thankfully such fires are not a common occurrence.