With my lot it's definitely a cue to play
Have you ever noticed how two cats who like each other will start off licking each other, and soon after it descends into a pile of fur tumbling around on the floor (play-fighting)?
The thing you need to be careful of, though, is much as you want to, not to engage in direct playfighting with him as they get into the habit and sometimes they can get quite rough! Ow! Plus, if your cat is ever around children they could be quite dangerous if they try to playfight young kids. I made this mistake with Shanti, and if (god forbid) she ever needs to be rehomed there is NO way on this earth that she would ever be safe with small children. She is such a loving puss, but also loves her fisticuffs!
Some cats will nip to say they've had enough, whilst others will give 'love bites', which are gentle nips that they 'hold' for a few seconds. I'm afraid it will be up to you to decipher what your cat means, but their eyes and the rest of their body language might give you a few hints
A wagging or twitching tail suggests they've either definitely had enough (although this would likely be accompanied by the cat trying to get away) or, more likely, that they would like a bit of rough and tumble. Wide open eyes or laid back ears - same deal. If the cat seems relaxed then it's most likely a little love nip!