The Suns are facing a major problem- they need to rebuild, but they have very few assets they can use to do achieve that goal. Completely rebuilding around Nash is a mistake. You simply can not rebuild around a 35 year old point guard, especially if he is not capable of guarding a chair.
On the other hand, if they get rid of Nash, Amare and Shaq, the team is going to be terrible, and they don't have their own draft pick in the next draft.
My guess is that Kerr (under Sarver's orders) might be trying to simply make some money next season by having an entertaining team that makes playoffs and at best gets to the second round. If they can sign Nash to a 3-year deal at $4M per year, it kinda makes sense. You shed your payroll in the short term while keeping a good, entertaining point guard. You avoid luxury tax and probably make playoffs.
From the business perspective, it makes sense.