An ultrasharp photoluminescence line intimately related to antiferromagnetic order has been found in NiPS3, a correlated van der Waals material, opening prospects for magneto-optical coupling schemes and spintronic applications. Here we unambiguously clarify the singlet origin of this excitation, confirming its roots in the spin structure. Based on a comprehensive investigation of the electronic structure using angle-resolved photoemission and q-dependent electron energy loss spectroscopy as experimental tools we develop, in a first step, an adequate theoretical understanding using density functional theory (DFT). In a second step the DFT is used as input for a dedicated multiplet theory by which we achieve excellent agreement with available multiplet spectroscopy. Our Letter connects the understanding of the electronic structure and of optical processes in NiPS3 and related materials as a prerequisite for further progress of the field.