A nanite was a microscopic robotic device, and a form of nanotechnology that was built by manipulating atoms. Nanites were small enough to enter living cells, and contained gigabytes of computer memory. They were also capable of mechanical self-replication.
Nanites were used by the Federation for medical purposes and were designed to work inside nuclei during cellular surgery. When they were not used, nanites were stored in a non-functional state. When necessary, nanites could be destroyed with a burst of high-level gamma radiation.
Nanites consisted of several components with different functions. Nanites used in the 24th century are composed of a forward propulsion block, an Oneamisu receiver, a Ranma ½ gyro block, a hex growth stack, Otomo calibration, two reverse flow paddles, one cell membrane sensor and manipulator each, a telemetry antenna, a forward motion sensor, a crystal articulator, logic circuits arranged from A-F and G-L, a T-cell antireceptor, and an emergency dissolve system.
In 2366, Wesley Crusher experimented with nanites aboard the USS Enterprise-D to see if he could enhance their capabilities, by letting them work together. When these nanites escaped they entered the Enterprise computer core where they multiplied and interfered with almost all ship operations. Their increasing numbers allowed them to develop collective intelligence. When Doctor Paul Stubbs tried to kill them in order to prevent interference with his scientific experiments, the nanites retaliated by taking over control of the Enterprise life support systems and even tried to kill him. The targeted nature of these actions became proof of sentience and they became perceived as lifeforms. The destruction of the Enterprise was prevented by Data who was able to talk to the nanites and as their spokesman was able to come to an agreement with Captain Jean-Luc Picard. The enhanced nanites repaired the damage to the ship's computers and were then transferred to Kavis Alpha IV, where they founded their own civilization. (TNG: "Evolution")
Doctor Beverly Crusher suggested to use nanites as a weapon against the Borg during their incursion into the Federation in late 2366. The plan however was not implemented, as the process of preparing the nanites would have taken several weeks. By then the Federation may only have existed as part of the Borg Collective. (TNG: "The Best of Both Worlds, Part II")
The plan to use nanites against the Borg is mentioned in the novel Vendetta, where it is revealed that the nanites are now legally protected as their apparent sentience caused many to argue that using them against the Borg as a weapon would be violating their rights, La Forge accepting the argument when Data points out that it is essentially the same as having him dismantled and copied simply to create new versions of him to fight the Borg.