Yeah, the factory images contain many different parts. They contain .img files for the boot partition, the recovery partition, bootloader partition, and radio partition. It then contains a zip file that contains the android os. Generally the procedure goes as follows:
1) Wipe system, boot, cache, data, and radio
2) flash bootloader & then reboot back into fastboot via command
3) flash radio files (LTE, then CDMA) & then reboot back into fastboot via command
4) flash recovery & boot files.
5) apply update zip to flash android system
6) reboot device.
*WARNING* Do not wipe or delete the bootloader partition, only flash over it. Deleting and then attempting to reboot is about the only possible way to hard brick this device.
Using a toolkit can be preferable to some who don't want to get their hands dirty, but there is no 4.2.2 Factory Image yet for the Verizon Gnex. So you will have to flash 4.1.1 and then take the ota. Also, this will unroot your device and completely wipe it clean.