Suggest to your sister that she ask for time to talk with the classes at the childcare center to explain about your nephew's braces. She will probably want to show the braces and explain how they will help him walk, keeping the language simple. Once children understand that your nephew is just like them -- except that he needs extra help to walk -- they will feel comfortable and the teasing should stop. You will probably see a large number of the children wanting to be his friend and help him!
Your sister should be prepared to explain the same things to children (and even adults) at the grocery store, the mall, and other places they go. Your nephew will see his mom handling other people and their curiosity in this way, and when he is old enough to educate them himself he will have had a great role model.