The primary (core) Nutch configuration files are
- conf/nutch-default.xml: This file contains generic default settings for Nutch specific configuration properties.
- conf/nutch-site.xml: This file contains site specific settings for Nutch specific configuration properties.
Hadoop configuration
- core/hadoop-default.xml: This file contains generic default settings for Hadoop daemons and Map/Reduce jobs.
- core-site.xml: This file contains site specific settings for all Hadoop daemons and Map/Reduce jobs.
- mapred-site.xml: This file contains site specific settings for the Hadoop Map/Reduce daemons and jobs.
For more information on the Hadoop configuration files please see GettingStartedWithHadoop#Configurationfiles
Dennis Kubes explains:
Configuration has two levels, default and final. It is supplied by the org.apache.hadoop.conf.Configuration class and extended in Nutch by the org.apache.nutch.util.NutchConfiguration class.
Although it is configurable, by default hadoop-default.xml and nutch-default.xml are default resources and hadoop-site.xml and nutch-site.xml are final resources. Resources (i.e. resource files) can be added by filename to either the default or final resource set and in fact this is how Nutch extends the Configuration class, by adding nutch-default.xml and nutch-site.xml.
Final resource values overwrite default resource values and final resource values added later will overwrite final resource values added earlier. When I say values I am talking about the individual properties not the resource files. Resource files are found by name in the classpath with the HADOOP_CONF_DIR or NUTCH_CONF_DIR being configured in the nutch and hadoop scripts as the first setting in the classpath. You can change the conf dir to pull configuration files from different directories and many tools in nutch and hadoop now provide a -conf options on the command line to set the conf directory.
So for example if you define the property in hadoop-default.xml or nutch-default.xml and it is not defined in either hadoop-site.xml or nutch-site.xml then the property will stand. If you define the property in either nutch-site.xml or hadoop-site.xml then it will override nutch-default.xml and hadoop-default.xml settings. And if you define it in both hadoop-site.xml and nutch-site.xml then the nutch-site.xml will override the hadoop-site.xml settings because nutch-site.xml is added after hadoop-site.xml. And remember only individual properties are overridden not the entire file.
Practically you should define properties having to do with Hadoop (i.e. the HDFS, MapReduce, etc) in the hadoop-site.xml and properties having to do with Nutch (i.e. fetcher, url-normalizers, etc) in the nutch-site.xml.
Andrzej Bialecki further details:
There are other two important config files:
- mapred-default.xml - (Hadoop specific) this is loaded as default resource when a new map-reduce JobConf is created - which means that it is loaded as the last default resource when you prepare the job configuration. Usually you should keep its content to a bare minimum. This is the best place to specify the default number of map and reduce tasks per job. If you feel adventurous you could also put some other stuff there, e.g. set the default compression with mapred.compress.map.output and so on.
- job.xml - (Hadoop specific Deprecated)this file is created dynamically, and represents a serialized JobConf. When map-reduce tasks are started they read this file as their last default resource (note - this is NOT a final resource!). So, if you accidentally distributed mapred-default.xml to all cluster nodes, but in your job you specified a different number of map or reduce tasks, your settings will take precedence. The same with other settings, such as e.g. the compression setting.
HOWEVER ... a common error is to put too many properties such as default number of map and reduce tasks in hadoop-site.xml. As Dennis explained, this is a final resource - which means that the values you specify there will ALWAYS override your job settings. This is bad, so don't do it 
- put them in mapred-default.xml.
In other words: use hadoop-site.xml only for things that are always the same for the whole cluster, such as the FS name, jobtracker name:port, temp directories, etc. because values you put there will always override your job settings. And do not put there things that are job-dependent.