Making hominy removes the hull, plus...
Lye, lime and ash are highly alkaline: the alkalinity helps the dissolution of hemicellulose, the major glue-like component of the maize cell walls, and loosens the hulls from the kernels and softens the corn. Some of the corn oil is broken down into emulsifying agents (monoglycerides and diglycerides), while bonding of the corn proteins to each other is also facilitated. The divalent calcium in lime acts as a cross-linking agent for protein and polysaccharide acidic side chains. As a result, while cornmeal made from untreated ground corn is unable by itself to form a dough with the addition of water, the chemical changes in masa allow dough formation, which is essential to the ability to fashion dough into tortillas. Also, soaking the corn in lime[1] kills the seed's germ, which keeps it from sprouting while in storage. Finally, in addition to providing a source of dietary calcium, the lime reacts with the corn so that the nutrient niacin can be assimilated by the digestive tract.
Previously the consumption of untreated corn was thought to cause pellagra. It was thought that the cause was from the corn or some infectious element carried by untreated corn. However, further advancements have shown that it is merely a correlational relationship not causal. In the 1700 and 1800s, areas highly dependent on corn as a staple diet were more likely to have pellagra. This is due to the fact that the niacin (the deficiency present in pellagra) found in untreated corn is not available for absorption in humans. The process of nixtamalization frees niacin into a state where it can be absorbed into the intestines. This was primarily elucidated by exploring why persons in Mexico, whom depended on maize in their diet, did not develop pellagra compared to other cultures during this time period. One reason was that Mayans treated corn in an alkaline solution to soften it. Thus, they freed niacin for absorption. This is process that we now refer to as nixtamalization.