The NANDLoader is a small bit of code in every channel that loads the rest of the channel. It is an example of an apploader, used for channels.
On the vWii, because the Espresso only boots Ancast Images, the NANDLoader must be signed. Nintendo solved this by adding titles 1-512 and 1-513 as NANDLoaders used for all titles. Because the Homebrew Channel did not have a NANDLoader, instead immediately beginning execution, this resulted in the vWii NANDLoader jumping to the wrong point, and breaking compatibility. fail0verflow solved this by adding a NANDLoader, which would load the main part, while on the vWii, the system NANDLoader would load the main code.