I see http://wiki.nginx.org/NginxHttpRewriteModule now, but I am still unsure about how some of the logic works. For example the follow rewrite code block allows YOURLS to be properly used with Nginx, but I don't see how this flows logically.:

[code]
if (!-f $request_filename){
set $rule_0 1$rule_0;
}
if (!-d $request_filename){
set $rule_0 2$rule_0;
}
if ($rule_0 = "21"){
rewrite ^/([0-9a-z]+)/?$ /yourls-go.php?id=$1 last;
}
[/code]