Nue's ability is with Seeds of Non-Definition, I believe.
So, how I believe it works is that the seeds make the target undefined. An undefined target can be anything, as it is, well, undefined. Without definition, it is anything and nothing. In fanworks (which I acknowledge are almost useless for evidence, but canonical evidence is sketchy and its not that far fetched), they've been used to create widescale illusions and cause transformations in Nue.
However. When called out on it, the illusions IMMEDIATELY vanished. Why? Because they became DEFINED, and the Seeds were destroyed.
I was thinking about this, and you know who ELSE was similar to this?

Doopliss! He made Mario undefined. Remember, he couldn't be seen or heard by anyone except Vivian.
Then, after that, when his name was applied, he FLIPPED OUT. He lost his power over Mario, and after being trounced, he couldn't try that ability again. Again, he was DEFINED.
Funny, isn't it?