Learn Romanian: Acel băiat este un prieten bun al nepotului meu.

We use the possessive article (al, a, ai, ale) when the noun being possessed has an indefinite article (like un) or is separated from the possessor by an adjective (like bun). Because we say un prieten bun (a good friend) instead of just prietenul (the friend), we need al to link it to the possessor.

Does al agree with the friend (prieten) or the nephew (nepotului)?

It agrees with the person or thing being possessed. Since prieten is masculine singular, we use al. If we were talking about a female friend (o prietenă), we would use a instead, even though the nephew is still masculine.

How do we build the word nepotului from nepot?

To show possession ("of the nephew"), we put the noun into the genitive case. For a masculine noun like nepot, we first add the definite article -ul (making nepotul, "the nephew"), and then add the genitive ending -ui, resulting in nepotului.

Does nepot mean nephew or grandson?

It can mean both! Romanian uses nepot for both "nephew" and "grandson". The feminine version, nepoată, means both "niece" and "granddaughter". You usually have to rely on context to know which one is meant.