Navmesh Bug
Prior to Skyrim 1.6, there was an issue where actors, other than the player character, often could not navigate in cells that had been created by mods or in vanilla Skyrim cells that had had their Navmeshes edited by mods. This was commonly referred to as "the Navmesh bug."
The Navmeshes only failed to be followed by actors when they were in .esp files; Navmesh data in an .esm file was used properly by actors. Thus before Skyrim 1.6, one work-around for the issue was to place Navmesh data for a mod into an .esm. This could take the form of having a mod be an .esm with no .esp, or an .esp/.esm pair where the .esp used the .esm as a master.
With the advent of Skyrim 1.6 such work-arounds are no longer necessary: actors properly use Navmesh data stored in .esp files, and that is the preferred format unless an .esm is needed for other reasons.