Surely the term 'nation' is used for mythological purposes. The term is tied up with a sense of identity. It invites citizens to identify with, and to strengthen their sense of belonging. The mythology points towards (apparent) genetic and cultural similarity, and so is often used to distance "people who are not like us", whether brown-skinned versus white-skinned, culturally Christian versus culturally Muslim, and even genetically-Norse versus genetically Saxon (here in the North East of England there is a strong desire to claim Viking genes, thus differentiating people in the North East from people in southern England). I say that it is a myth because it represents a story that I choose. I could choose a different story. An obvious example of this mythologising is the frequently-used term "this island nation" used by many British people to differentiate themselves from people of continental Europe, and to disclaim the validity of 'supranational' government from Strasbourg / Brussels. A second example is the US attempt to forge one nation out of disparate peoples, that is, to invite them to believe that they are one people.
The myth of the nation is powerful because it helps to determine perceived political legitimacy. In Belgium the myth of a Belgian nation appears to be stretched near to breaking point. The myth of a Macedonian nation straddling Greece and Macedonia terrifies the Greek government. The myth of a Kurdish nation has been perpetually squashed by Turkey, Iraq and Russia.
I believe that the term 'nation' is also increasingly in crisis because of the eagerness of many people to embrace dual (multiple) identities: African American, Asian British, Polish British, French Muslim, Galician Spanish (there appears to be a Celtic identity seeking to create unity between Galicia, Brittany, Cornwall, Wales and Ireland).