It is known, from Sethra's remarks in Issola, that while Zungaron holds Nightslayer, he has it only due to accident, and doesn't know what to do with it.
Zungaron originally acquired Nightslayer from from a Serioli archeological dig, as described in the short story The Desecrator. He had been sent by Sethra, supposedly to investigate an 'amorphic anomaly.' Zungaron describes Nightslayer as a dark, malicious spirit, even more bloodthirsty than a Dzurlord.
The Serioli name of Nightslayer is translated as Loci for different levels of energy from various planes of existence.
Considering the definition of Necromancy, one might condense the name to "Loci for Necromantic energy". Presuming that these loci are indeed energy sources for the weapon, a translated name might be more like "Font of Necromancy"
The name Nightslayer is not derived from the Serioli name; Zungaron picked it because he "like[d] how it sound[ed]. You know, dangerous, and evil, and like that." Or, depending who you believe, Nightslayer chose the name for itself.