Spoiler Alert: Nesting Agreements ("Nesting") are easy to describe but not always the best solution (at least from a divorce lawyer's perspective and experience).
Nesting is the basic concept that in a custody agreement the children remain in the family residence regardless of which parent is "custodial". Instead, the parents rotate in and out of the house based on a defined schedule which determines when each parent is with the children every day of the month. I suspect that from a therapeutic point of view it is ideal for the children because they stay in one house, have an easy trip to and from school, stay in their bedrooms with all of their "stuff", remain in the same neighborhood as their friends and remain in the same extra-curricular activities. Some parents may rotate every two or three days or every other week.
As an experienced divorce attorney my observations are that while this may be optimal for the children it is usually not more than a bandaid for parents on a temporary basis. Rarely have I seen parents continue Nesting after a final settlement agreement and/or divorce (if married). I do recall a case where the parents had a long lasting Nesting arrangement where the father was a police officer working the midnight shift and the mother was a real estate agent. Their paths did not cross very often and it eliminated the need for child care due to either parent's employment. Another scenario that might work is where there is an auxiliary apartment in the home and one person is upstairs and the other is downstairs. Of course who lives where and how the costs are divided as well as usage of the kitchen and family room can lead to difficulties as they are both in the house at the same time.
For Nesting to work whether for short or long duration the parents have to be cooperative, civil and respectful of each other and in general agreement on parenting issues. Nesting parents must also have a secondary place to reside when they are not in the home with their children. The secondary residence could be with their own parents, siblings, significant other or their own separate apartment/residence.
Each parent when in the family residence has to be respectful of the other parent's property and privacy. Nesting should not be an opportunity to snoop and inspect the mail, bills, medical records, jewelry, clothing and other private matters of the other parent.
Nesting usually is a deferral of the likely inevitable which is that one or both parents may allege violations of their privacy or that the financial obligations of maintaining the family residence (on a pro rata basis) as well as their secondary residence become too expensive.
Some parents may think that Nesting is an opportunity to continue their relationship or to hope that there will be a reconciliation. Often these are unrealistic expectations and will lead to hurt feelings and difficult interactions when the goal was to minimize problems and maximize the stability for the children.
So my advice to parents considering Nesting is to go in with your eyes wide open as to what is necessary to be mutually successful as well as to both have an idea of the intended duration of the arrangement. If one person thinks it is a long term solution and the other is thinking of only six months the arrangement will fail and thus was only a temporary solution. Nesting is shared custody on steroids because the residence is shared as well as custody.