Li–S batteries with an improved cycle life of over 1000 cycles have been achieved using cathodes of sulfur-infiltrated nanoporous carbon with carbonate-based electrolytes. In these cells, a protective cathode–electrolyte interphase (CEI) is formed, leading to solid-state conversion of S to Li2S in the nanopores. This prevents the dissolution of polysulfides and slows capacity fade. However, there is currently little understanding of what limits the capacity and rate performance of these Li–S batteries. Here, we aim to deepen our understanding of the capacity and rate limitation using a variety of structure-sensitive and electrochemical techniques, such as operando small-angle neutron scattering (SANS), operando X-ray diffraction (XRD), electrochemical impedance spectroscopy, and galvanostatic charge/discharge. Operando SANS and XRD data give direct evidence of CEI formation and solid-state sulfur conversion occurring inside the nanopores. Electrochemical measurements using two nanoporous carbons with different pore sizes suggest that charge transfer at the active material interfaces and the specific CEI/active material structure in the nanopores play the dominant role in defining capacity and rate performance. This work helps define strategies to increase the sulfur loading while maximizing sulfur usage, rate performance, and cycle life.