The Collaborative International Dictionary of English v.0.48:

Nephew \Neph"ew\ (n[e^]f"[-u]; in England n[e^]v"[-u]; 277), n.
   [OE. neveu, nevou, nevu, fr. F. neveu, OF. also, nevou, L.
   nepos; akin to AS. nefa, D. neef, G. neffe, OHG. nevo, Icel.
   nefi a kinsman, Gr. ne`podes, pl., brood, young, Skr.
   nep[=a]t grandson, descendant. [root]262. Cf. Niece,
   Nepotism.]
   1. A grandson or grandchild, or remoter lineal descendant.
      [Obs.]
      [1913 Webster]

            But if any widow have children or nephews [Rev. Ver.
            grandchildren].                     --1 Tim. v. 4.
      [1913 Webster]

            If naturalists say true that nephews are often liker
            to their grandfathers than to their fathers. --Jer.
                                                  Taylor.
      [1913 Webster]

   2. A cousin. [Obs.] --Shak.
      [1913 Webster]

   3. The son of a brother or a sister, or of a brother-in-law
      or sister-in-law. --Chaucer.
      [1913 Webster]

Bouvier's Law Dictionary, Revised 6th Ed (1856):

GRANDCHILDREN, domestic relations. The children of one's children. Sometimes
these may claim bequests given in a will to children, though in general they
can make no such claim. 6 Co. 16.