Nolvadex is used as a mid-level estrogen product. It isn’t that Nolvadex reduces levels of estrogen but instead blocks estrogen from the estrogen receptors.
The claim that Nolvadex reduces gains should not be taken too seriously. The fact is that any number of bodybuilders have made excellent gains while using Nolvadex. However, if this effect exists at all, it must be very minor, due to the excellent gains that many have made, and from the fact that no one has noticed any such thing from Clomid which has the same activity profile.
The fact that Nolvadex will reduce water retention may result in the user agreeing that gains are less, since weight gain is less, thus reinforcing the bias.