Dear Theresa, Really there is nothing wrong with nursing into the second or third year. There is no evidence of any psychological or nutritional harm to children who are nursed as toddlers. When to wean is a decision that needs to be made between the mom and the baby. It is doubtful that the nursing is related to your nephew's size. Most likely the nursing is not a significant contributor to his diet, but is rather more of an emotional and psychological one.
Children come in all different shapes and sizes.
Either your nephew is just naturally small, or perhaps his solids diet is suboptimal, but I cannot comment on whether or not that is the case due to lack of information. However, I do think you can relax about your sister and her baby continuing their nursing relationship. Thank you for writing. You should not rely on this information as a substitute for personal medical attention, diagnosis or hands-on treatment. If you are concerned about your health or that of a child's, please consult your family's health care provider immediately and do not wait for a response from our professionals.