Materials Science PhD student here, I'll do my best.
The morphology of the brittle B2-FeAl intermetallic compound is the key. In the conventional lightweight steel alloys, the B2 intermetallics make the alloy brittle (so they don't work harden very well), so in the past researchers optimized their alloys to avoid forming these intermetallics [0]. The nickel promotes the nucleation of the intermetallic particles during heat treatment [1], so that you get a more-or-less uniform distribution of many nanocrystalline B2 particles, instead of a smaller number of larger or more clustered B2 domains. The small B2 particles contribute to strain hardening by pinning dislocation motion, without reducing the ductility of the alloy.
From the Nature letter:
[0]: "One of the general concepts employed until now in the alloy design of Fe-Al-Mn-C-based, high-aluminium, low-density steel has been the suppression of ‘brittle’ intermetallic compound formation by stabilizing the ‘ductile’ austenite matrix."
[1]: "To expand the stability domain of B2 above the recrystallization temperature (normally, 800–900 °C) of deformed austenite, the alloying recipe of an austenitic low-density steel was modified by adding 5 weight per cent nickel (Ni), which is one of the most effective elements for forming B2 with aluminium."
The morphology of the brittle B2-FeAl intermetallic compound is the key. In the conventional lightweight steel alloys, the B2 intermetallics make the alloy brittle (so they don't work harden very well), so in the past researchers optimized their alloys to avoid forming these intermetallics [0]. The nickel promotes the nucleation of the intermetallic particles during heat treatment [1], so that you get a more-or-less uniform distribution of many nanocrystalline B2 particles, instead of a smaller number of larger or more clustered B2 domains. The small B2 particles contribute to strain hardening by pinning dislocation motion, without reducing the ductility of the alloy.
From the Nature letter:
[0]: "One of the general concepts employed until now in the alloy design of Fe-Al-Mn-C-based, high-aluminium, low-density steel has been the suppression of ‘brittle’ intermetallic compound formation by stabilizing the ‘ductile’ austenite matrix."
[1]: "To expand the stability domain of B2 above the recrystallization temperature (normally, 800–900 °C) of deformed austenite, the alloying recipe of an austenitic low-density steel was modified by adding 5 weight per cent nickel (Ni), which is one of the most effective elements for forming B2 with aluminium."