Nominal can also be translated to mean “as nominated”.
A lot of people expect the word “normal” to be used. Propulsion still normal etc etc. Normal behaviour may however be the rocket exploding and destroying everything in sight.
Nominal can also mean very small in relation to the norm. “How about they charge cyclists a nominal road tax fee which could go towards pothole repairs?”
I suspect that the full phrase might be “Propulsion system still with only nominal variation” or something similar. They could use “normal” - but maybe that has some different meaning in that context.
“Notional” means to exist only in concept, e.g. a notional design or a notional bill. Nominal means at the expected value or within an anticipated range.
As for why the controllers call out nominal conditions rather than reporting by exception, they are following a script which ensures that they are communicating with the other controllers and launch director and are tracking all of the associated parameters. This is frankly a somewhat arcane practice as there is nothing that can be done to fix problems in flight, and largely serves to inform the Range Safety Officer as to whether to anticipate a potential flight destruct scenario, though the ultimate decision on flight destruct is almost always whether the vehicle is approaching the hazard lines posing a potential ground/shipping hazard if it were to go off course or break up outside those lines.