Nephi is referring to the humble followers of Christ among the many churches of the last days. In another scripture, he refers to those outside the Mormon Church as saints, Behold the formation of a church which is most abominable above all other churches, which slayeth the saints of God…for the praise of the world do they destroy the saints of God, and bring them down into captivity (1 Nephi 13:5,9). In this latter example, Nephi is speaking of the saints among the Gentile nations prior to the life and mission of Columbus. Therefore, in these two separate instances, Nephi refers to those outside the church as being acknowledged by the Lord. This should not surprise us. For the Lord to save an unrighteous Mormon and damn a righteous Methodist is an unacceptable doctrine that denies the justice of God.
Many have wondered, “what will happen to those of the other churches who followed Christ their entire lives, but never joined the Church of Jesus Christ of Latter-day Saints”? Nephi makes it clear that the Lord recognizes those humble followers of Christ even if they are few in number and err because they are taught by the precepts of men. Like everyone else, they will be judged according to their works and according to that portion of light which they had received in mortality.
However, in order for these to receive all the blessings that the Lord has promised for the righteous, they must receive the ordinances of salvation. Whether in this life or the next, they must receive baptism and temple ordinances in order to enter the celestial kingdom—for baptism, performed by one with priesthood authority, is the key to entering the gate of the celestial kingdom:
’Therefore in the ordinances [of the kingdom], the power of godliness is manifest.
And without the ordinances thereof, and the authority of the priesthood, the power of godliness is not manifest unto men in the flesh;
For without this no man can see the face of God, even the Father, and live.’ (DC 84:20-22)