From the case of US, I understand that nationals are not the same as citizens.
That's really US-specific terminology. There are other similar distinctions like the various types of British nationality, each somewhat different from each other.
That is, a person who is allowed to stay permanently in a place may not receive a passport.
As noted in a comment, US nationals can actually get a US passport. As far as I can tell, the main difference is their right to vote in federal elections. None of this readily generalizes to other countries and it's not useful to understand Germany nationality law so I won't elaborate further.
On the other hand, in the US as in Germany, there are people who have the right to reside more-or-less permanently without being citizens. That's not what the nationals/citizens distinction in the US is about and permanent residents do not get US passports. If they need a passport (in Germany it is mandatory, in the US it's not), they would get it from their country of origin. There are also various statuses and passport-like documents for people who cannot do that (refugees, stateless people).
Recently Germany passed a new law on citizenship (as far as I understand), but videos news articles and videos often use imagery of a passport.
That's because becoming a citizen allows you to receive a passport. In Germany, a personal ID card (Personalausweis) is even more common but I guess passport pictures are just easier and, as pointed out in a comment, more distinctive.
So, does this mean that in the case of Germany that citizenship means on has to get the passport necessarily?
Not exactly but German residents do have to hold a government ID (either a passport or a Personalausweis). If you become a German citizen, you often have to relinquish your previous citizenship and will need either of those.
Then, what happend to the Niederlassungserlaubnis?
Nothing, that's completely unrelated. As noted, that's not what the nationals/citizens distinction in the US is about and that's not what the new German law is about. None of this means the permanent resident status has disappeared. This status still exists.