I think that "not great by any stretch" is a perfect fit for Nadal nowadays. He is surely playing fine, way better than in some abysmal periods of 2015, had a few good moments at the end of 2015, but, as far as 2016 goes, he played "ok" all week, good enough to beat low ranked players, like most of the top 20 could have done, and get demolished by Djokovic (his most loop sided win of the week).
Would I be shocked to seem him in semis at the AO? Course not, if there is something he knows it is how to win tennis matches. However, he could also crash and burn easily, either because the opponent got fire (and in the past he would deal with such things almost easily), either because he is having a real bad day. So it is hard to put him above the others, given how upset prone he is now.
In a face off against the rest of the top 5, honestly to me Murray has the edge (yes, I know the result of their last match). Wawrinka would have it on his racquet, and Federer... well, I would not give Federer the edge, but wouldn't be shocked either.
That is, good, but not great. That's exactly why we're discussing it in the first place.