Yes, you need to have several video files with different quality. And then specify this files in ABR HLS settings.
What you are asking about is called Encoding. Nimble does not perform encoding of video files. This is inefficient for the VoD, because it gives very heavy load on the server at the time of streaming. You can use FFMPEG to create files with different quality from one video file. If you worry about disk space on your server, you can use remote HTTP storage for your video files. Please read this article for details:
http://blog.wmspanel.com/2015/07/vod-streaming-from-remote-http-storage.html