Sometimes thought to be very loosely related to the word gremlin, but the word nilmerg actually contains a much deeper meaning. The word is used when a males cum face is much like the face of a gremlin, i.e. wrinkled up and contorted. The phrase is not meant as an insult in any way, simply a bit of banter between friends.
"Whoa, that guy is such a nilmerg".
(man to man) "Nilmerg!"