|There is more information available on this subject at Nanotechnology on the English-language Wikipedia.|
Nanotechnology is the study of the control of matter on an atomic and molecular scale; it could also be used as a general term for and technology that works on the molecular or sub-molecular level. In Red Faction, the term pertains specifically to nanorobotics. Nanorobotics is the engineering discipline in which machines are created on the microscopic scale; such machines are often referred to as nanites.
Though nanotechnology is portrayed as extremely harmful in Red Faction, nanites don't necessarily have to be malicious. They can also be used for engineering purposes such as construction, for example in the reconstructor. In real life, nanotechnology is also being pursued in the medical field; nanites can also be used to make repairs to the inside of bodies through relatively non-invasive procedures.
Nanites are microscopic robots or machines. Originally invented by Axel Capek for unknown purposes, nanites replicated uncontrollably within human bodies, acting as a disease known as the Plague. The Nanorifle seen in Red Faction: Guerrilla fires similar nanites, but these are not self-replicating and they have to be made in the nanoforge.
The nanoforge is a small factory that produces nanites. It is the heart of the nanorifle and is highly advanced technology. During the events of Red Faction: Guerrilla, the Earth Defense Force attempted to retrieve the nanoforge from The Badlands; they failed when Alec Mason retrieved the device for the Red Faction.
If the nanoforge were able to be replicated by the Red Faction, they would be able to make many weapons. There are endless possibilities in ways to weaponize the nanoforge, although other uses could also be medical or mechanical in nature.
The Nanorifle uses the nanoforge to create nanites, which proceed to destroy whatever object they come in contact with by disassembling it at the molecular level. The object will then lose cohesion and fall apart.