Can someone explain if this is a Nunu bug or what exactly is happening here?

Need to know what everyone had built.

Twitch was also uneffected but seemingly within radius. And seeing he was auto attacking we can be sure no banshee effect "just came up".

I have 2 theories (aside from a bug, which it very well might have been)

1. The veigar might have had the mastery that restores %missing health on a kill/assist, and your ult appeared to go off at the exact same time he killed Syndra AND leveled up (considering you weren't building AP, this health restoration might explain the seemingly no-damage ult)
2. Despite the appearance of the circle, Veigar might have been out of range

My guess is, he wasn't standing in it.

The game has 3 axes, x, y and z. You were on a higher point when casting your ultimate. The circle however, is a fix overlay and doesn't adjust itself on the y axes. Add the camera angle and boom! You get a "Rito please" moment.

Just a guess tho