Nanometers are the space between each component on a piece of silicon. The closer you can put them together, the less silicon you use, the power is less, and the heat dissipation is less. The former means you don't use as much raw material, and the middle that you can reduce the power supply, and the latter you can reduce the cooling required. It cuts manufacturing costs on the main components by up to 40%. The original PS3 and XB360 were 90nm on their two/three main chips. The new PS3 should be 65nm. The Falcon XB360 was supposed to also be but does not yet seem to be so, it could be a smaller shrink, maybe to 80nm.