The word G. fwion “nephew” appeared in the Gnomish Lexicon of the 1910s, as a masculinized form of the feminine patronymic G. fwi-, so properly meaning “sister’s son” (GL/36). It is likely related to ᴱQ. súyon “nephew” (QL/87), where ✱su̯ion > swion > fwion with the (Gnomish) sound change of sw > fw.
Neo-Sindarin: Since ancient sw > hw in Sindarin, I would adapt this word as ᴺS. whion, and would assume it is a now-obscure elaboration of -ion “son”. Since we have no other words for “nephew”, I’d use it for male children of any sibling, not just a sister’s son.
ᴱQ. súyon appeared in the Qenya Lexicon of the 1910s with the glosses “nephew, daughter’s son”, a combination of ᴱQ. sui “daughter” and ᴱQ. yon “son” (QL/87). It also appeared in the Poetic and Mythological Words of Eldarissa with the gloss “nephew” (PME/87). Based on its cognate G. fwion “nephew, properly sister’s children”, I think it is more likely this word means “sister’s son” rather than “daughter’s son”.
Neo-Quenya: I would retain this word in Neo-Quenya as a now-obscure elaboration of √YON “son”, but since there are no other words for “nephew” in Quenya, I would use it for male children of any sibling.