The biggest reason I can spot is Nehrim's use of meshes. On one hand, their creative usage of vanilla meshes and high detail makes Nehrim great. On the other, its horribly inefficient and causes the terrible slowdown that has been mentioned. The cells of Shadow Song Mine (the start dungeon) have 2,500* references each, which adds up to over 500,000 polygons(!!!) per cell. Whats worse is that about half these polygons (and therefore a lot of the lag) could be cut with very simple Nifskope edits. For example, anytime you see a rope in the mine it is attached to an animated high polygon zombie somewhere beyond the roof. One cell had something like 10 zombies, each with animation, collision, and plenty of polygons, each of which the player will never see. Likewise, all the pathways and structures are built of individual planks, each with their own collision and each of which adds to the reference count. Had these been assembled in a modeling program, thousands of polygons worth of collision could have been cut. Likewise, collision could also have been removed from the rocks in the ceiling and other inaccessible areas (especially since the start area is entirely corded off by collision walls - far, unreachable areas of the cave could just as well been a matte painting and no one would know better). Their love for disembodied lightbulb lighting with small radii probably doesn't help either (there are many places where several bulbs are placed though one could have sufficed), especially when you add the heavy AI into the mix.
Basically, this means that efficiently getting rid of lag means re-building large chunks of the gameworld :/
Oddly enough, the exteriors I briefly checked out were reasonable in reference count. My guess is that the view distance is at fault here, perhaps combined with the altered tree animations.
In a related issues, I suspect that the esm could use cleaning since I encountered several errors when loading. It also includes references to Arkwend (their Morrowind TC) and Cube (their FO3 mod), removing which could cut a bit off the file size.
*by comparison, a typical Oblivion cell has a few hundred.