In this case, “Mito” is referring to the channel, but your overall unpacking process of what the different things mean is correct:
Nuclei means were’re measuring something about the nuclei
Granularity means we’re measuring the nucleus’s granularity
5 means we’re looking at granularity at the scale of 5 pixels (as opposed to 2 pixels, or 20 pixels)
Mito means we’re looking at the nucleus’s granularity in the Mito channel, AKA the Alexa647 channel. You’re right that given what we know from biology there’s unlikely to be a ton of intensity at all in that channel in the nucleus’s location, but a) there might be mitochondria that are over or under the nuclei that DO get picked up and b) for cell painting we always err on the side of measuring MORE things so that we are more likely to pick up unusual or subtle phenotypes.
Does that help at all?