I continue to struggle in getting a handle on this question!
I read it this way; Nietzsche in this passage is doing good service in repudiation of Plato's Ideal Forms. He concludes that the concept or mental image of a thing is not only NOT a better representation of that thing's being—it is indeed, and must be, a worse one (rendering unequal things equal cannot be a step toward clarity).
To put it another way; Plato thought that language was often faulty because it didn't accord with the Ideal Form, of which the physical object was a crude imitation. Each leaf is a phenomenon of the Form of the leaf.
Epicurus was concerned that we might go wrong with language if the word for a thing, which two people share, does not accord with the mental image of the thing, which must be different for each and formed by experience. Each leaf is a leaf by linguistic convention. Its genuine nature is atoms and void.
To solve Plato's problem, in his view, demands recourse to Logic and Geometry, that we might intimate the nature of the Forms which we cannot 'see' or even well-express.
To solve Epicurus' problem, in my view, we must have recourse to (1.) the senses, (2.) to a critique of the Reason that operates on them, and (3.) to the gentle proddings of corrective dialogue to calibrate the differences that arise over words.
But even as I type all of this the account fails to satisfy me. (And you should take anything I say about Forms with a critical eye; I haven't studied those dialogues since college).