I have been using open source projects for a while and been developing upon the open source applications and every so often I come across the words 'Nightly Build' and I have always been curious as to what it actually means. Does it literally mean the projects are done purely as side projects (usually at night after everyone has finished their day jobs) and there's no true contributor/dedicated development team or is it more complex than that?
No, it means that every night, everything that has been checked into source control is built.  That build is a "nightly build".