The term nitrate factory is not a good term. When people say that, they mean that crap gets trapped in there and rots, release nitrate/phosphate from feeding/waste back into the water. It does NOT mean that it makes nitrate on it’s own.
Having high nitrate is bad because if a pest algae gets hold it can explode. Having 0 nitrate is bad because you need a tiny bit of nitrate for all the stuff you want to grow in your tank, like coral, to use as nutrients. Another problem with 0 nitrate is that Cyanobacteria can thrive as long as there are the other required nutrients since they can use nitrogen from N2, while everything else that relies on nitrate starves.