Polish people have always been a nation, even when they had no country, that's the definition, a group of people that share a common culture, language, religion, etc.
In most, modern, mainstream, native English nation = country 'kraj'.
Poland is a nation. Polish people are a nationality or an ethnic group.
The overlap of ethnic Poles and Polish nationals is very high but not universal. Ethnic Poles may be citizens of any country and Polish nationals (defined as a citizen of the Republic of Poland) are not necessarily ethnic Poles.
Gypsies are an ethnic group (more accurately a number of ethnic groups) spread out over many countries and forming a majority in none.
Jewish people are a ethno-religious group that form a majority in one country but the term Israeli and Jewish are not interchangeable.
Arab is a cover term for a number of different nationalities and ethnic groups that form majorities in a number of countries.
Calling Poles, Gypsies, Jews and Arabs 'narody' in Polish is correct usage. Calling them all 'nations' in English creates too much potential misunderstanding where the word has too many potential meanings.