At the moment, the discord user name uses their global name. This can lead to confusions. If this is already possible I couldn't find it in the documentations.

It would be nice if guild/ server spesific names could be used instead

Reading this again, you want to use server nickname instead of global name in Minecraft instead? If so, this is already possible: [%d4f:nickname% on Discord] %d4f:message%

Currently it is not the case that it shows the server nickname.

But just the users normal one (for clarification, note the space between "DDR Khat" from the discord variant.)

Reading this again, you want to use server nickname instead of global name in Minecraft instead?
If so, this is already possible: [%d4f:nickname% on Discord] %d4f:message%

Ah, in that case I'll label this as bug

This still doesn't appear to be fixed.

It is still grabbing my username, and not the server nickname.

Did you compile the mod yourself?
If you have grabbed a build from CurseForge/Modrinth, it's because I haven't pushed the fixed build

That might be it. I am currently using 1.6 👍