It's a cut down version to save costs, obviously, that's just it. The battery is much smaller, the camera is cheaper (Same sensor as N4, just with OIS), the screen is cheaper etc - as simple as that, the G2 costs over twice as much. The N5 has very snappy chipset and is a great phone for its price, but there were cuts on the costs to be able to offer it at that price. It performs very snappy and is just good enough at most things, but obviously you're not getting top of the line hardware in other fields. Especially if you care about great battery life and camera.
So does "Nexus" now mean cheap, shitty quality just to meet a certain price? And getting updates first is just a perk?
I thought it used to mean it had all the latest and greatest hardware and software for a low price sold directly by Google.