I think a lot of us still live under the belief of 'playing fair' though that idea has been consistently used to make sure we stay 'humbled'.
I don't like nepotism when *insert worker* has been on the job for x amount of years (and works hard) but then the bosses' kid (or friend) shows up for a few months and instantly gets promoted. Nepotism spits in the face of that "pull yourself up by your bootstraps" and "all you have to do is work hard" BS that they love spouting but they'd never admit that.
When 'working hard' amounts to you being in the same position and a random 'worker' who knows the boss or someone at the top gets promoted over you, then you start to hate nepotism too.
Though, I completely understand wanting to help folks you know and get them in a better position if you're certain of their abilities. The problem comes when others are simply overlooked and their 'hard work' is seen as meaningless because they weren't kin or friend to you. Do you value the abilities of your workers? Can you ensure them that their hard work won't just leave them in the same position for the entirety of their career? What incentive do they have to keep working hard besides the money? Why 'work hard' when *insert person who knows the higher ups* gets promoted within the first year?