Namekian Warrior In Black Piccolo's origin and original spacetime.

In the recently released SDBH 13th anniversary guide there is an interview with Heroes producer Akai Masatoshi and Toei producer Hiroki Koyama about the Namakian Warrior In Black Piccolo. They reveal he is a Piccolo when he fused with Nail during the Frieza arc. In this spacetime because Goku couldn't make it in time Frieza kills everyone else.
In exchange for granting Piccolo more power he departs with his spacetime in order to accompany and help Aeos on her mission. Namekian Warrior In Black Piccolo never fused with Kami and only seen kid Gohan which is why it is said in the arcade he is glad to have met Gohan all grown up.
(SDBH 13th Anniversary Interview Guide Text)
Akai- I regret some disappointment that the Namekian Warrior In Black wasn't explored much in the promo anime. He as well had a very thought out backstory, in other words he is a Piccolo that fused with Nail during the Frieza arc. The setting was a Piccolo in a spacetime where Goku could not make it in time and Frieza having killed everyone. At that time Aeos arrives making a deal with Piccolo that she will grant him power if he departs from his spacetime. In the arcade game we have the characters dialogue based on these settings.