A nested contract refers to a smart contract that contains or references one or more additional smart contracts within its code. This structure allows for complex operations and functionalities to be executed in a more organized manner.The outer contract serves as the primary interface, managing user interactions and handling specific tasks. It can call methods and functions from the nested contracts, often to separate different processes or to enhance modularity. This approach makes the codebase more manageable and easier to maintain.Using nested contracts can improve security and efficiency. Each nested contract can focus on a specific function, reducing the risk of errors in the overall system. Moreover, it allows developers to update or replace individual contracts without affecting the entire structure, providing flexibility in development and maintenance.In summary, nested contracts offer a way to organize smart contract code effectively, promoting better readability, modularity, and easier updates.