What Bluetooth 2.1 EDR specification has to do with NFC?

In the Bluetooth 2.1 EDR Specification, a new pairing technique has been defined that is called as "Out of Band" or OOB association model.

Using this type of pairing mechanism we can touch two NFC devices with bluetooth capability to pair directly without the need of searching and pairing manually.

Technical Description: The Out of Band (OOB) association model is primarily designed for scenarios where an Out of Band mechanism is used to both discover the devices as well as to exchange or transfer cryptographic numbers used in the pairing process. In order to be effective from a security point of view, the Out of Band channel should provide different properties in terms of security compared to the Bluetooth radio channel. The Out of Band channel should be resistant to MITM(Man in the middle) attacks. If it is not, security may be compromised during authentication.

The user's experience differs a bit depending on the Out of Band mechanism. As an example, with a Near Field Communication (NFC) solution, the user(s) will initially touch the two devices together, and is given the option to pair the first device with the other device. If "yes" is entered, the pairing is successful. This is a single touch experience where the exchanged information is used in both devices. The information exchanged includes discovery information (such as the Bluetooth Device Address) as well as cryptographic information. 

One of the devices will use a Bluetooth Device Address to establish a connection with the other device. The rest of the exchanged information is used during authentication.

The OOB mechanism may be implemented as either read only or read/write. If one side is read only, a oneway authentication is performed. If both sides are read/write, a two-way authentication is performed.

The OOB protocol is selected only when the pairing process has been activated by previous OOB exchange of information and one (or both) of the device(s) gives OOB as the IO capabilities. The protocol uses the information which has been exchanged and simply asks the user to confirm connection. The OOB association model supports any OOB mechanism where cryptographic information and the Bluetooth Device Address can be exchanged. The OOB association model does not support a solution where the user has activated a Bluetooth connection and would like to use OOB for authentication only.

Source : Bluegiga.com

What is NFC Technology?

NFC stands for Near Field Communication.

Before getting into the Technical briefing of the technology I would like to make it interesting to general users by explaining its benefits once it reaches masses.

NFC is such a great technology that will make our wallets lighter and thinner by moving all our credit cards, debit cards and various other membership cards, our movie tickets, bus tickets and even our business cards, that we use in paper or Plastic form as virtual cards(Application), in our mobile phone.
Interesting Hmmm...
That means even if we forget our wallets, we can enjoy!!!

NFC is short range wireless technology based on RFID that works at 13.56 MHz to communicate between various NFC enabled devices.

Some Tech Definition: Near Field Communication , as a subset of RFID(Radio Frequency Identification), is a bidirectional short range communication technology. NFC allows an interaction distance of approximately 5-10 cm and a maximum data rate of 424kb/s. It works via electromagnetic field induction, thus it is designed for simple and safe data exchange directly between two devices. NFC offers three different operation modes: passive tag (card emulation), active devices for reading and writing of passive tags and peer to peer communication (both devices are active). NFC allows both, convenient and intuitive interactions. It enables users to exchange data, connect and configure devices or use services like contactless payment and e-ticketing in a very easy way.

Once you get into this domain and look around for sources of information you will come across devices that are NFC capable but not enabled. That means it has got NFC chip inside but not supported to be used because of lack of software.
One such example is Nokia C7-00 launched in India. Once a software upgrade is available, it will enable its NFC capability.