The nand is the internal storage of the 3ds and contains everything it needs to boot/run.
Previously hacking the 3ds is risky because we mess with the nand directly (called sysnand), so if something goes wrong and the console can't boot anymore, we called it a "brick". Therefore developers create a clone of the nand stored on the SD instead (called emunand) so we can do whatever we want with it. If we somehow brick it, we can still boot the console through sysnand and create another functional emunand.
The 3ds hacking scene has come so far that the setup a9lh+luma is so easy to setup and safe to use. We can run Hourglass9/Derypt9 before the home menu even boots, and with it we can back up or restore the nand. Therefore we can mess with the sysnand directly and if something happens, just run Hg9 and restore a backup.