Djokovic, 34, was detained by officials at the border on Thursday amid a storm of protest about the decision to grant him a medical exemption from vaccination requirements to play in the Australian Open.
The world number one, who has won nine Australian Opens including the last three and is tied with Nadal and Roger Federer on 20 career Grand Slam titles, is holed up in a quarantine hotel in Melbourne as his lawyers contest the federal government's entry ban.
"Of course I don't like the situation that is happening," Nadal told reporters after winning his match at the Melbourne Summer Set ATP 250 tournament. "In some way I feel sorry for him.
"But at the same time, he knew the conditions since a lot of months ago, so he makes his own decision."
The 35-year-old Nadal tested positive for COVID-19 last month after playing at an exhibition in Abu Dhabi. The Spaniard said he experienced a "very challenging" few days.
Djokovic, who has publicly criticised mandatory vaccines, has refused to disclose his inoculation status and said he has been granted a medical exemption to compete in Australia.
Nadal said what has been happening was not good for anyone.
"Seems some rough situation," Nadal said. "It's normal that the people here in Australia get very frustrated with the case because they have been going through a lot of very hard lockdowns...
"I believe in what the people who knows about medicine say, and if the people say that we need to get vaccinated, we need to get the vaccine."
World number seven Matteo Berrettini, who lost to Djokovic in last year's Wimbledon final, also had some sympathy with the Serb.
"I think it's not nice to be, I don't know, how many hours he was there (at the airport)," the Italian said.
"But at the same time, I can understand why Australian people obviously feel like (they do)."
World number two Daniil Medvedev said that, should Djokovic be prevented from competing at Melbourne Park, the men's draw would open up.
"There is still Rafa (but) the rest of us don't have a lot of slams, for sure," the Russian, who won his first major at the U.S. Open last year, said.
"When somebody wins it nine times, he's not there, the draw opens up a little bit. There is no secret in it."