ZIA, while what is happening to your nephew is very normal but it can be detrimental. If his goal is to play at a D1 power 5 or MiLB...well those kids really hone themselves. It's very much going to be which one of these things is not like the other when he stands next to them waiting to be judged. He can't just show up, but that's why those kids are special.
Having said that, those kids also have a drive within them, no one can make a 10, 11, 12 grader train. They either want to push themselves or they don't. They either want it or they don't. I would ask him what he wants out of baseball and then ask him if he thinks his actions are going to result in that goal.
Dont make excuses for him either. My son has an August birthday, he's one of the youngest in his class too but it doesn't stop him from running hills in the neighborhood or biking to LA Fitness 3-5 times a week. He wanted to show up to baseball and run longer than anyone, mission accomplished. He's not the fastest kid or the strongest kid but he's still working hard....being young has nothing to do with it. It's about your goals and who you surround yourself with. Are they better? Do they make you want to be better?