Both Nutmeg and Mace come from several species of trees in the genus Myristica found in the Mollucus or Spice Islands. Believe it or not, nutmeg and mace are from different parts of the seed. Nutmeg is from the inner seed while Mace is made up of the outer red lace like material that covers the seed.
Nutmeg is sold in two forms. The form most of us use is the powdered form where the Nutmeg has been ground up and sold. Although it is convenient, it looses its potency much quicker. It is recommended you invest in the seed as that has an indefinite shelf life. You will need to invest in a small grater so you can prepare freshly ground nutmeg when needed.
Nutmeg is not a nut so if you have a nut allergy, you won't have a problem. Nutmeg is encased by a yellow edible fruit the size and shape of a peach. The fruit splits in half to reveal the red covered seed. Once dried it is sold as Mace and then the covering is removed to reveal the inner shiny brown seed. Normally, you will only find Mace in powdered form.
Historically, it has an interesting history. The Arabs exclusively imported Nutmeg into Europe till 1512 when Vasco De Gama claimed the Spice Islands for Portugal. They and the Dutch restricted the trees to certain islands so they could preserve their monopoly. One reason both they and the Dutch did this was simply to control who grew the trees.
They did this because the seed could be used to start new trees and they wanted to continue controlling this industry. Although the Dutch treated the seeds with lime so they would not sprout, the birds took the seeds to other islands, where they began growing. Unfortunately, they were unable to control where the nutmeg trees grew because a Frenchman smuggled enough seeds out for the French to start their own plantations in Mauritius. In 1796, the British took over the area and expanded the Nutmeg growing region to the Caribbean. Today, the island of Granada calls itself the Nutmeg Island.
It is recommended that if you run out of Nutmeg you substitute Mace and vice versa but know that the Mace has a slightly harsher flavor.