Can they really, though? I have a three-year old nephew who can speak, but not particularly well.
I feel like if you dropped me into another country where I didn't speak the language, and had someone to look after me and respond to me whenever I tried to communicate my frustrations or desires, and I had no other responsibilities other than to exist, I could get to the vocabulary of a three-year old in less than a year.
The analogy isn't perfect and it is open to interpretation. That said, watch your nephew develop over the next three years. Note that there is very little deliberate training or discipline involved. Keep in mind that he could do this for several languages in parallel.
By 5 or 6, his language skills will have progressed much faster than most adults' in a similar period. At 4-6, a few months of immersion (say summer with grandparents) will yield some mind-blowing progress. Again, not impossible for an adult... but rare in practice.
I grew up in a multilingual house. My father was an english speaker. We lived in Israel. He did speak the local language (hebrew), but I spoke it better by 6. I could also handle thick accents (irish) that my mother couldn't understand.
This isn't unusual. Kids translating for parents is a very common phenomenon for immigrant families. It happens because kids learn faster. Adults can make up the difference with discipline, but it's a tough contest.
I've been wondering if it would actually hamper his skills to have to learn more than one language at a time, but your experience at least seems to say the opposite.
That said, I think there are hidden abilities. My younger brother would only speak one language. He understood both, and we both had a smattering of other languages (russian, arabic, polish, tunisian) too.
Seemingly, he wasn't bilingual (2-4yo). But, after a week of immersion (grandparents) he would fully switch language and stop speaking the first one. The ability was there, but he didn't like switching in real time.
If Your nephews get a week or two in Japan, they'll probably unlock another level of language ability very quickly.
The bonus is accent. On this, even a disciplined and talented adult can rarely come near children's innate ability. Accents are usually carried by adults decades after fluency is achieved. Kids don't have this problem. Again, immigrant families give us a wide sample group to observe.
Kids can learn one or multiple languages extremely fast, and they can do it without formal, strict or even intentional instruction... at a very young age.
There's obviously something different, and for this purpose superior, about a child's brain. There are probably a lot of more subtle examples, language is something that's easily comparable.
Naturally, that's interesting to study. There may be ways of replicating some of the child brain's abilities in adults. But for immediate and practical purposes, it makes sense to just take advantage of this window while it exists. Multilingual childcare seems like an awesome choice, for example.
We should also identify other aspects of learning that are like this, and create the environment for them to engage. I've heard that navigation skills are similar... very easy to develop at a young age... even down to a constant awareness of cardinal directions.