Nephi has presented two important issues. The first is the atoning mission of the Messiah, an atonement that enacted grace. The second is the law of Moses, the works that Jehovah had required of the faithful. It was those works of sacrifice that created the conditions of atonement until the final atonement is enacted.
Nephi continues that message here, noting that they talk, rejoice, preach, and prophesy of the Messiah. They know that the ultimate atonement will come, and they rejoice in that future condition.
However, they also teach the law. Nephi speaks of the deadness of the law and of looking to the life in Christ. That is a parallelism that Isaiah would appreciate. It is easy to read this statement as saying that there is no value in the law, but the contrast is to the life in Christ. Thus, the “dead” is only meant as a precursor to life. It is an image of the cycle of death and resurrection. Thus, although they live the law now, the law will die and be resurrected with and through the Messiah into something much grander.