Allot of people use the the words "bedding" and "nesting" freely when speaking about each. "Bedding" to me is what lines the bottom of the cage. Its what the hammy lives on. Another word to call this that might stir up less confusion between people is "substrate"
Nesting material to me would be the extra materials you can give you ham to sleep in. I use aspen bedding for my rodents and give them un-dyed unscented tissue paper for their nesting material.
When I give my hams their toilet/tissue paper I just put the whole ply in and then let them shred it. They seem to love to do it, and they know just where it should go
But you could tear it up a bit and just place it anywhere in the cage. They will move it around anyway.
Now who told you to use cat litter?
There is no need for any cat littler whatsoever! You could offer a sand bath using the chinchilla sand found at pet stores. (makes sure its sand, not power or dust) But no cat litter. That would probably feel awfully scratchy in their feet.. who does that? Plus most litters these days have clumping properties in it. I would think cat litter would be harmful to a hamster.