Sentry and nginx are used together to trace errors by generating a unique request ID that is passed along in each request. This allows for stitching together logs from multiple systems, such as load balancers and web servers, to help identify the root cause of performance issues. The request ID is configured in nginx's access logs and then bound to the Sentry SDK, enabling it to be used as a tag in Sentry's UI. With this setup, errors can be tracked across different systems and correlated with traditional access logs, providing deeper understanding and context to debug better.