The ‘fleshy bottom layer’ (or nail groove) contains the dividing cells. The way you can see it is that when the cells here divide, one daughter cell will remain and will keep dividing. The other one will migrate up towards the nail, start to produce a lot of keratin (the stuff that makes our nails so strong) and will eventually die and become part of the nail itself. So the nail groove doesn’t move, but continuously pushes new keratin into the nail, this pushes the already existing keratin further up, thus our nail grows.
Edit: just to make sure this isn’t misunderstood: the nail groove is at the base of the nail, not the whole skin UNDER the nail, that’s the nail bed (the nail groove is it’s most proximal part, so there where the nail bed and nail itself meet (this needs a picture…)).
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