Nebulae are great clouds of interstellar dust that interfere with ship scanners. Ships cannot gather LRS data for items within a nearby nebula scanner, although the nebulae themselves do show up on LRS; only by entering the nebula sector will its contents be revealed on SRS. Nebulae thus make an effective place to hide from enemies. A ship occupying a nebula sector has an effective LRS radius of zero, regardless of that ship's actual scan rating, so the nebula confers some degree of blindness along with the cover it provides.  Note that nebulae do not block your long-range scanners' ability to see sectors beyond them; they obscure only the nebulae sectors themselves. That is, a nebula one sector away from your ship will not prevent it from scanning a regular sector on the other side of the nebula (i.e., two sectors away from the ship).
 
It is entirely possible that nebulae can hide worlds and wormnet portals. Once a nebula sector has been explored, any worlds or portals discovered therein will be known to you, but since there is no way to scan into nebulae sectors from afar, your scan data of those worlds or portals will immediately become obsolete as soon as your ships leave the nebula sector.
 
Like wormnet portals, nebulae can drift from sector to sector, either randomly or according to a pattern. Unlike portals, nebulae can drift into sectors that already contain a world or portal. Two nebulae may drift into the same sector for a turn and then part ways the following turn; no additional effect occurs when two nebulae overlap in such a manner.