c.1200, nute-scalen; see nut + shell (n.). Figurative use with reference to "great condensation" (1570s) supposedly originally is a reference to a copy of the "Iliad," mentioned by Pliny, which was so small it could fit into the shell of a nut.
Concisely, in a few words, as in Here's our proposal—in a nutshell, we want to sell the business to you. This hyperbolic expression alludes to the Roman writer Pliny's description of Homer's Iliad being copied in so tiny a hand that it could fit in a nutshell. For a time it referred to anything compressed, but from the 1500s on it referred mainly to written or spoken words.