Originally Posted by Top of climb

For the vast majority of people nationality should be the same as issuing country. This applies even if your passport was issued at a consulate - the issuing country is still the country on the cover of the passport, not the country in which the consulate was situated.

The need for two fields arise because some countries issue passports to non-citizens. For example those on a British National (Overseas) passport would list GBR as the issuing country but list nationality as BNO (not GBR).