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> Invoke the given program as the spell checker. By default, nano uses the command specified in the SPELL environment variable, or, if SPELL is not set, its own interactive spell checker that requires the spell program to be installed on your system.
Nano runs an external program to spell check. You probably didn't have `spell` installed (or the SPELL environment variable pointed to something else that wasn't installed or working .. maybe it was set to `Spell` which might explain the capitalization in the error message).
The nanorc command overriddes the `speller` and tells Nano to run spell check using the external program `aspell` passing the `-x` and `-c` options (at least). From the aspell man page the `-x` option disabled backups and the `-c` option checks a single file.