Queen's Club organisers said on Monday that Murray would play at their tournament in the doubles competition alongside Spanish veteran Feliciano Lopez, despite having appeared to announce his retirement in January.
The Scot has not played since a first-round loss to Roberto Bautista Agut at the Australian Open, taking time off to have hip surgery.
"It was a little bit surprising that he announced that, that quick," said Nadal after setting up a French Open semi-final against Federer.
"I always thought that he will find a way to try to be back, because (he's) still young and still very passionate about the game.
"That's great news for, first, for him and for his team and family, and then for the tour by itself and then for the fans. So it's good for the world of tennis. Happy for it, and especially happy for him."
Former world number one Murray had said he may attempt to play Wimbledon next month as his farewell event.
But the 37-year-old Federer hopes he can continue for longer, despite being part of a 'thank you' video message played to Murray in Melbourne after he had apparently called it quits.
"We were hoping that this message is not actually real," said the 20-time Grand Slam title winner.
"I think all of us top guys would be thrilled to see him back on the tour."