A 52-year-old woman with a 10-year history of type 2 diabetes mellitus presents with progressive renal dysfunction. Her serum creatinine is 2.8 mg/dL (eGFR 22 mL/min/1.73 m²), and urinalysis shows 3+ proteinuria with no hematuria. Kidney ultrasound shows normal-sized kidneys without obstruction. A renal biopsy reveals nodular glomerulosclerosis with basement membrane thickening. Which segment of the nephron is PRIMARILY affected in this patient, and what is the functional consequence?