While initially appearing to be a clunky and restrictive special move, Nayru's is surprisingly versatile and useful in counterintuitive situations. The move has long end lag but is offset somewhat by a nice blender and a decent ending hitbox, but the real shining star of Nayru's is the 7 invuln frames it gives you during startup between frames 4 and 11. This enables you to use Nayru's as something similar to a parry with good timing, and it's much easier to land a more solid blender when your opponent whiffed something at you and is now halfway inside of you. This use in particular is closer to the triangle jump in terms of read requirements, but this is generally an easier read than a triangle jump. Unfortunately, unless you are on ledge and force your opponent offstage a Nayru's parry like this usually won't net you any followups, especially if your opponent rolls or techs out.
Nayru's shines (heh) most of all when using this parry as an out-of-shield option. You must jump oos to perform this nayru's after jumpsquat ends. Frame perfect this move is invuln 10-17 and hits on 17 from shield. This is best used to read grabs on shield and hard punish them. If timed correctly, a good grab read will leave them with empty hands dead in the center of Nayru's where it is most difficult to SDI out of the resulting blender.
Another really magnificent use of Nayru's is an aerial stall. You can use Nayru's midair to stop your vertical momentum. This is most useful to mixup when you are descending for followup or escape. If you missed a kick and your opponent is conditioned towards you wavelanding or regular landing, he may attempt something when actionable OoS. Throwing a Nayru's at around head level on shield will dodge any grab and blend and disrupt any option thrown too late. Aiming this with a little momentum at their shield is best as you will have the option to land behind them where you cannot get shieldgrabbed if they manage to shield the entire Nayru's blender.
Nayru's can also be used to gimp recoveries, and most effectively flat / low and close recoveries. A nayru's slightly below ledge will blend a space animal hugging the stage, making stage teching almost impossible to time correctly. It is also useful against marth as good timing can put you in invuln during dolphin slash and stage spike before his sweetspot hits. A fast fthrow and an aggressive-coverage ledge nayru's can also be used to frame trap and interrupt DJs and fast recoveries and gimp at very low %.
Nayru's on platform has an additional and much faster OoS option, shield drop platform warp Nayru's. If you shield drop through the platform and Nayru's in the next 3 frames you will perform a platform warp and be grounded part of the way through the move without needing to jump. Frame perfect this gives you invuln 5-12 and hits 12-18, making it an extremely solid defensive option to further buff your presence on platforms.
It's worth noting that nayru's does have "edge cancel" ledge tech, but it is not a true edge cancel, nor extremely useful, nor an easy thing to pull off. If you SH Nayru's in air and land on the edge and slide off, you will complete the nayru's and become actionable shortly before grabbing ledge. This has fringe uses at best, with the most obvious being stuffing a high spacie recovery and taking ledge. There are almost always better coverage options, however.