This work studies the optical emission line properties and physical conditions of the narrow line region (NLR) of seven narrow-line Seyfert 1 galaxies (NLS1). Our results show that the flux carried out by the narrow component of H-beta is, on average, 50% of the total line flux. As a result, the [OIII] 5007/H-beta ratio emitted in the NLR varies from 1 to 5, instead of the universally adopted value of 10. This has strong implications for the required spectral energy distribution that ionizes the NLR gas. Photoionization models that consider a NLR composed of a combination of matter-bounded and ionization-bounded clouds are successful at explaining the low [OIII] 5007/H-beta ratio and the weakness of low-ionization lines of NLS1s. Variation of the relative proportion of these two type of clouds nicely reproduce the dispersion of narrow line ratios found among the NLS1 sample. Assuming similar physical model parameters of both NLS1s and the normal Seyfert 1 galaxy NGC 5548, we show that the observed differences of emission line ratios between these two groups can be explained in terms of the shape of the input ionizing continuum. Narrow emission line ratios of NLS1s are better reproduced by a steep power-law continuum in the EUV -- soft X-ray region, with spectral index alpha ~ -2. Flatter spectral indices (alpha ~ -1.5) match the observed line ratios of NGC 5548 but are unable to provide a good match to the NLS1 ratios. This result is consistent with ROSAT observations of NLS1s, which show that these objects are characterized by steeper power-law indices than those of Sy1 galaxies with strong broad optical lines.