The two nominations rule was something about tag bloat, there being a bunch of tags that never got fic written for them (but were still wrangled?), and it being a strain on the servers. I don't think the mods ever offered a real explanation or their reasoning.

Tbh, I think that was what kicked off people being really cavalier about using socks to nominate everything they might want instead of sticking to the prescribed number of noms (or previously keeping quiet about socking up).