I’ll get right to it: both the stock Nightwatch configuration file (as of at least Nightwatch v. 2.0.9) and the Nightwatch docs are inaccurate for using the geckodriver web driver (specifically, v. 0.30.0) to run tests. Here is what you need to do, isolated to the firefox environment portion of the test_settings object in a nightwatch.conf.js file:

module.exports = {

  // snip, snip, snippety-snip

  test_settings: {

    // more snipping...

    firefox: {
      capabilities : {
        browserName : 'firefox',
        acceptInsecureCerts: true,
        'moz:firefoxOptions': {
          args: [
            // '-headless',
            // '-verbose'
          ],
          prefs: {
            // 'media.navigator.permission.disable': true,
            // 'media.navigator.streams.fake': true
          }
        }
      },
      webdriver: {
        start_process: true,
        server_path: '',
        host: '127.0.0.1',
        port: 4444,
        cli_args: [
          // very verbose geckodriver logs
          // '-vv'
        ]
      }
    }

  }

};

Curious about what’s going on? I’ll elaborate, property by significant property:

1. The property you want is capabilities, not desiredCapabilities. The capabilities property is what ultimately shipped in the WebDriver specification. While it seems that both geckodriver and chromedriver continue to support the older desiredCapabilities, capabilities is the property you want now and into the future.
2. The acceptInsecureCerts property should be a member directly on capabilities; this too is in the WebDriver spec. And in testing today, it seems that some combo of Nightwatch and geckodriver ignore acceptInsecureCerts in any other location.
3. For Firefox-specific options (like command-line args and browser about:config prefs), the property to use is moz:firefoxOptions. That is shipping in the latest default nightwatch.conf.js file, as is the parallel goog:chromeOptions for chromedriver. But if you've got a legacy configuration file—like I did—you'll want to update the old chromeOptions property, too.
4. For local testing, you’ll want to set an IPv4 address to your local loopback for the host property on webdriver. On the Macs I was working on (one Big Sur, one Monterey), localhost was resolving to the IPv6 ::1 adddress. Geckodriver was refusing the connection on that, as I discovered by running wget out of desperation. wget then retried on 127.0.0.1:

  $ geckodriver
  1648330755779 geckodriver INFO    Listening on 127.0.0.1:4444
  # separate terminal process, with geckodriver still running:
  $ wget http://localhost:4444/
  --2022-03-26 16:49:18--  http://localhost:4444/
  Resolving localhost (localhost)... ::1, 127.0.0.1
  Connecting to localhost (localhost)|::1|:4444... failed: Connection refused.
  Connecting to localhost (localhost)|127.0.0.1|:4444... connected.
  HTTP request sent, awaiting response... 405 Method Not Allowed
  2022-03-26 16:49:18 ERROR 405: Method Not Allowed.

The 405 error is expected: there's no meaningful resource on the geckodriver for GET /. But the Nightwatch test-runner (I assume) did not attempt such a retry. Instead, it left behind a seemingly impossible error message of Failed to connect to GeckoDriver on 127.0.0.1 with port 4444.

Bonus information: geckodriver now supports parallel testing, where two browsers can be open once! This is important for me, as I’m using Nightwatch to test out the code I’ve been writing for my book on WebRTC. I’ll save the full instructions for how to pull off parallel tests in full for another post, but essentially, you just need two different environments (I have firefoxActive and firefoxPassive, rather than just firefox). And each environment must have its own webdriver process on its own port. So 4444 (the default) on one, and say 4445 on another. When you go to run nightwatch, pass in the -e argument with the two environments: npx nightwatch -e firefoxActive,firefoxPassive.