Nil
Nil is a noninitialized value, or lack of a value, that is blank and equal to nothing. Math cannot be performed on nil or anything equivalent to nil, because nothing, unlike 0, is not a numerical value. When an object is deleted, using the :Remove() function, it is removed from the game completely by setting its parent to nil. Unless the object is referenced, it cannot be recovered.
Uses
Nil can be used to remove the value of a property of an object. It is very common to set the parent of an object to "Nil", removing it from the game per se. If the object is referenced by a variable for example, you can bring the object back.
Look through the comments in the script above to understand why recovering an object by reference is possible.
Here are more examples of "nil" usage:
This occurs because setting a players health to "nil" will cause the player to have nothing as a health. Because nothing is similar to having no health at all, your health will go to 0 and you will gain a wipeout.
See Also
Absolute beginner's guide to scripting
Parts
Script Creation Walkthrough
Programming in Lua:1.2 - Global Variables
Programming in Lua:2.1 - Nil
Null
