A nested function refers to a function defined within another function. In programming, this allows the inner function to access variables and parameters of its enclosing function, creating a scope that can enhance modularity and organization.When applied to smart contracts, which are self-executing contracts with the terms directly written into code, nested functions can improve complexity and functionality. For example, a smart contract might have an outer function that handles user inputs and an inner function that processes these inputs or performs specific calculations.Using nested functions can help in structuring code more effectively, making it easier to read and maintain. It can also limit the scope of certain variables, ensuring that they are not accessible outside their intended context, which enhances security. Overall, nested functions are a useful programming technique that fosters better organization and flow within smart contracts, allowing developers to implement advanced features with clarity.