Haha yeah, Nibelheim, but that part could have simply been done in flashback form, to show who he really is, the parts I mean is, the part with the well, and the part on Mt. Nibel, when Tifa falls, it's all good the first play through, when this stuff is new to you, but even as little as second play through, this part feels added, and unnecessary in my oppinion.
The part with Nibelheim is deifinately needed though, I agree with that. If it wasn't there, we still wouldn't know.."I'm Cloud, from Nibelheim..."
We'd be left thinking he's some crazy imaginative fool or something. :-O