No, what he said was that whilst nihilism is correct if we look upon reality as a whole, in its totality, it is correct as far as humanity is concerned. Even though it is not 'real' it can still be objective as it has a demonstratable effect upon human actions, we can see that it effects human actions in a meaningful way therefore morality is objective to all intents and purposes, to see it as not real is correct in the totality - but not practical in human society where it is a real almost tangible thing. To act as if it is not real accomplishes no useful goal within human society.
No, it has meaning practically within human society, and as almost all human activity happens within human society it is best to treat it as if it were true, or if not this then to at least assert one moral as better relative to another.
No, morality can be discussed by moral relativists, as a matter of which moral is practical in carrying out the intention of a moral, the regulation of behaviour within a given society. Normally with an idea of the general well being (even if it cannot exist in any real sense) in mind.
Nietzsche said;
"A nihilist is a man who judges that the real world ought not to be, and that the world as it ought to be does not exist. According to this view, our existence (action, suffering, willing, feeling) has no meaning: this 'in vain' is the nihilists' pathos—an inconsistency on the part of the nihilists."
He argued that humans 'will' meaning, much as we will morals, so that they acomplish practical meaning.