Why is mouse returning nil?

The mouse object is not replicated across the client/server boundary because the mouse is solely used by the client. Therefore, attempting to send the mouse over a RemoteEvent will result in nil because the reference is nil. What you can try instead, is to send the CFrame of the mouse as the remote argument (mouse.Hit), which is the position where the mouse was when they left-clicked. This will send the CFrame over as the argument which will not be nil.

local player = game:GetService("Players").LocalPlayer
local mouse = player:GetMouse()

local repstorage = game:GetService("ReplicatedStorage")

local remote = repstorage:WaitForChild("RemoteEvent")

mouse.Button1Down:Connect(function()
    remote:FireServer(mouse.Hit)
end

local repstorage = game:GetService("ReplicatedStorage")

local rp1 = rp:WaitForChild("RemoteEvent")

rp1.OnServerEvent:Connect(function(player, mousehit)
    print(mousehit)
end