The nutmeg tree belongs to the Myristicaceae family, and native to the Banda Islands that are part of the larger Molucca Islands of Indonesia, also called the "Spice Islands". The Molucca Islands are also the home of cloves, a spice you can read about in a few posts below. The islands were something of a spice paradise for colonists and European and Arabic spice traders. During the 16th and 17th century, nutmeg was believed to keep off the plague and was therefore a very pricey spice, and high in demand.
The state of Connecticut has sometimes been called the "nutmeg state" because of some Connecticut traders who fooled people into buying what they believed to be nutmeg, but in reality it was nothing but carved woods looking like the spice.
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