I'm curious to know why people use the nightly builds. According to this post from Jasem they are not supposed to be used in production. So what's the deal exactly with nightly builds?

They're just what they are: builds providing the bleeding edge, unstable, version. There are multiple archs to build for, so having a CI system doing this for you allows you to verify that all of them build independently. An innocent hand, somehow more innocent than your development setup, avoiding the "builds for me!" problem.

-Eric

I am not clear what bleeding edge means and whether there are 2 or 3
alternative releases.

Directions from www.indilib.org/download/ubuntu.html refers to installing kstars-bleeding
for either stable or bleeding.
a) Stable release repository: ppa:mutlaqja/ppa To install the latest Ekos: kstars-bleeding
b) Nightly build repository: ppa:mutlaqja/indinightly To install the latest Ekos: kstars-bleeding

Common build types:
1. Feature release Major stable feature release
2. Maintenance release Bug fix updates to a feature release no new drivers or enhancements
3. Prerelease Tested versions of the next feature release
4. non release Developer unit tested software

I am guessing that:
a) Installing kstars-bleeding from the stable repository is used to address
release types 1 and 2
b) Installing kstars-bleeding from the nightly build is used to address release type 3 and 4.

I do not know if this is more or less the case, but can see wanting to run build type 2 for best
stability and build type 3 for some new driver or added features.
For myself running Fedora 29 and using repository
lupinix-indi-bleeding: INDI and KStars for Fedora - Bleeding Edge
Which bleeding-edge I wondered, but since it has been running 3.0 for some time it must be the
nightly.

Close, but not quite. kstars-bleeding is suppose to override and replace Ubuntu's kstars package. Whether stable or nightly, the name is kstars-bleeding. It could be 6 months old. There are now just two channels. Stable and nightly so just 1 & 4