Any discussion of the way the Buddha used the term nibbāna must begin with the distinction that there are two levels of nibbāna (or, to use the original terminology, two nibbāna properties).
The first is the nibbāna experienced by a person who has attained the goal and is still alive. This is described metaphorically as the extinguishing of passion, aversion, & delusion. The second is the nibbāna after death.
The simile for these two states is the distinction between a fire that has gone out but whose embers are still warm, and one so totally out that its embers are cold. The Buddha used the views of fire current in his day in somewhat different ways when discussing these two levels of nibbāna, and so we must consider them separately.
To understand the implications of nibbāna in the present life, it is necessary to know something of the way in which fire is described in the Pali Canon. There, fire is said to be caused by the excitation or agitation of the heat property. To continue burning, it must have sustenance (upādāna). Its relationship to its sustenance is one of clinging, dependence, & entrapment. When it goes out, the heat property is no longer agitated, and the fire is said to be freed.
Thus the metaphor of nibbāna in this case would have implications of calming together with release from dependencies, attachments, & bondage. This in turn suggests that of all the attempts to describe the etymology of the word nibbāna, the closest is the one Buddhaghosa proposed in The Path of Purification: Un- (nir) + binding (vāna): Unbinding.
To understand further what is meant by the unbinding of the mind, it is also important to know that the word upādāna—the sustenance for the fire—also means clinging, and that according to the Buddha the mind has four forms of clinging that keep it in bondage: clinging to sensuality, to views, to precepts & practices, and to doctrines of the self.
In each case, the clinging is the passion & desire the mind feels for these things. To overcome this clinging, then, the mind must see not only the drawbacks of these four objects of clinging, but, more importantly, the drawbacks of the act of passion & desire itself.
This reflection by Ajaan Geoff is from the Treatises book, The Mind Like Fire Unbound: An Image in the Early Buddhist Discourses, “Abstract: ‘Released…with Unrestricted Awareness.’”