To my understanding, Nerath is a reference to Nera, the Queen-name (but not original name) of the Raven Queen.
It's a Human empire, built upon the northwestern remains of both Arkhosia and Bael Turath, and Mithralfast is a very important territory within its reaches, so Dwarves, Dragonborn, Tieflings, and of course Humans are VERY present in the country. There are Elves of course, in Harken Forest and Winterbole Forest, and Halflings trade up and down the rivers from the sea ports of southern Therund and Sarthel all the way north to Fallcrest in the Nentir Vale. Nera is the capital, but it's actually south of a tall mountain range that would be a difficult journey by land from the Barony of Therund, though the sea ports along the Dragondown Coast and through the Midnight Sea would provide access across the Bay of Nera to the capital.
During the time of the setting of H1-H3, etc, Nera has partially been destroyed by Gnolls in the last wars, and Mithralfast is now the acting "capital". A really good read though, if you want to know more about the City of Nera and the heart of the nation, would be Dragon #393 "Legacy of Nerath" – it has an awesome picture of the Capital City of Nera, and furthermore, discusses much of the culture of the Empire during its height, people seeking its redemention, and most importantly, the Flame Imperishable. If you want an organization that keeps alive the spirit of Nerath, check out Dragon #396 "Guilds and Groups: The Last Legion."
I would also take a look at Dragon #375 "Domains of Dread: Graefmotte, the Font of Sorrows," which is a Ravenloft-type Domain of Dread whose Dark Lord is a Baron from the last days of Old Nerath; as well as Dragon #364 "Demonomicon of Iggwilv: Yeenoghu, Demon Prince of Gnolls," which includes about a page on the last King of Nerath, King Elidyr, who may still be battling an eternal struggle in the Abyss against the White Ruin, one of Yeenoghu's greatest Gnoll champions.
Before posting, why not ask yourself, What Would Wrecan Say? A great man once said "If WotC put out boxes full of free money there'd still be people complaining about how it's folded." – Boraxe