"An extensive aggregate of persons, so closely associated with each other by common descent, language, or history, as to form a distinct race or people, usually organized as a separate political state and occupying a definite territory."

This usage dates in English back to the 1300s, with a first example that I won't type because I'm not sure where the letter thorn is hiding; the second is "All naciun and lede aglit vr lauerd for to drede," from Crsor M, 1300. (Geeze, I need a magnifying glass or better cheaters.)

It enters English from French, and before from Latin (that is an 'L', right?): nation-em, "breed, stock, race, nation", from nasci, "to be born".

But it goes on to say, "In early examples the racial idea is usually stronger than the political; in recent use the notion of political unity and independence is more prominent." An example is from 1872, "In Switzerland four languages are spoken; yet the Swiss certainly make one nation."

From reading David Reynolds, my understanding is that the use of "nation" to mean a culturally-related (or "racially", or "historically", or something) group of people that ought to be a political unit, and vice versa, that a political unit ought to be a somehow-related group of people, is a relatively recent thing, possibly a gift of Woodrow Wilson following WWI. (Think of the phrase "nation-state".)

[Word of the day: "Natiform": Resembling or having the form of buttocks. Thanks, OED!]