It Takes a Nation
Nawi is a character we never actually see: he's dead before the story even begins. But we learn a lot about the Nation by the way Mau thinks about Nawi and his stories. For example, he uses a lot of really great metaphors, which he calls "lie[s] to help you understand what's true" (15.25).
Like this one: "Take one strip of the vine and [...] it needs the strength of two men to pull it apart. But weave five strands of it into a rope and a hundred men can't break it. The more they pull, the more it binds together, and the stronger it becomes. That is the Nation" (2.106). (Just like a finger trap.) As Mau later learns, Nation isn't a place: it's people.
Nawi also gets to state one of the novel's major themes. He's got a "lucky" leg, but he doesn't see it as a problem: "It was a gift, boy, not a curse. [...] When much is taken, something is returned" (2.109). Hm. It seems like you could maybe say the same thing about the tsunami.
The Shark Word (And it's Not, "Aieeeeee!")
Nawi also teaches Mau the shark word, which scares off sharks if you use it under water. He warns Mau that, if he ever uses it, he should look for a dolphin afterward. The dolphin is Nawi's spirit, and Mau should toss it a fish in thanks.
No surprise, that shark word comes in pretty handy. After he uses it, "He looked around, half expecting to see a dolphin waiting for him to throw it a fish—and it would feel... right... to do so. But there was no dolphin" (7.138). This is the last straw in Mau's belief in the religion of the Nation—and so Granddad Nawi ends up being both Mau's connection to his people's history and a major reason he eventually breaks from their traditions.
In other words? Nawi is hardly a person. He's more of a metaphor machine. Even so, we'd like to imagine that he's the dolphin at the end, leaping into the air with joy.