It literally means:
* "Nik" (نیک): Good, virtuous, noble
* "Nafs" (نفس): Soul, spirit, self
Therefore, "Niknafs" refers to someone who has a good soul or a virtuous spirit. It implies someone with positive qualities like:
* Kindness
* Integrity
* Honesty
* Compassion
* Generosity
The word carries a strong moral connotation and is often used to describe someone who is morally upright and possesses good character.