Cedar lumber is OK, just not cedar shavings, and there is some controversy about that. The problem with the shavings is the large surface area gives off that distinctive cedar odor that can cause respiratory issues as churckx3 said. Ventilation is important. Painting can make it easier to clean.
What I have read is that you can use a semigloss or glossy paint as that helps with cleaning...for the nest boxes I plan on using probably pine straw or shredded newspaper ....I use sand in my coop and run. Started out with pine shavings in the coop and thought I would use the deep litter method but read so much positive on the sand that I switched about 3-4 weeks ago. And I LOVE the sand...no odor, easy cleaning as the poo clumps, rake the run...I spend maybe 5 minutes on each coop a day cleaning the poo.
cedar lumber is fine - I have built my whole entire coop from red cedar even their huddle boxes are red cedar - I just left the bottom open for air to vent and easy cleaning - BUT the areas where to chicken lay or roost is nature lumber (tree branch) or treated boards which is what i used inside the huddle boxes and then in the nest boxes...
this is just from my experience and my chicks/chickens are doing just fine