NAND is your internal Wii memory (500'ish MB), you can dump your NAND with everything included on it: saves, Miis, installed VC/WiiWare games, it's pretty convenient because the emuNAND (emulated NAND) doesn't have 500'ish MB limit, you can store whatever you want in your SD/USB device.
Once you make a dump make sure set up the correct path to that dump.
In USB Loader GX you can use this dump to store Wii saves, through the setting "NAND emulation = Partial", so your saves will be stored in your SD/USB device instead your Wii internal memory, saving you a lot of space.
"Install wad to emuNAND" works the same way, you can install VC/WiiWare/DLC directly to your SD/USB device instead your Wii internal memory, again saving you a lot of space.
Bare in mind that some wads couldn't be installed because compatibility problems, same with Wii saves, for example Skyward Sword didn't like read saves though emuNAND.