How does Nickel harden steel?
I have the following comments about nickel steels:


Tensile strength is different than hardness. I assume you are specifically asking about hardness, not strength.
Hardness has two different aspects: resisting wear and machinability. Different steels will exhibit different degrees of the two aspects. Ideally, you want a steel that is hard wearing, yet highly machinable.
There are different alloys involving nickel, notably the nickel alloys and chromium-nickel alloys. These two types of steel are different.
Different alloys have very different hardening characteristics. Even very minor changes to the amount of carbon or nickel in an alloy can have dramatic effects on its hardening characteristics.
The main effect of nickel when present in a ferritic or pearlite matrix is to increase the fineness of the grain structure.
Nickel slows the growth in size of ferritic/pearlite grains. This makes it easier to obtain a consistent carburization on the surface of a workpiece. For this reason, small amounts of nickel are valuable in alloys which will be case hardened.
Nickel preferentially dissolves into the ferritic crystals of certain steel phases, therefore it can potentially increase the hardness of a steel without harming its ductility.