annielostit you've asked for advice so here is what I would do....
(assuming there is no other issue not mentioned in your post)
rush to make friends again with my brother, to put the past behind us and to move on. I would want my child to know their cousin and I would make efforts to build the bridges between us, regardless of the last few years.
This is because life is too short and your original reasons for falling out don't seem particularly huge (IMHO).
If your brother wishes to build bridges with his parents or further family members he will but if not, let it be. It is not disloyal to see your brother and nephew and to let your child/ren know their cousin.
You say
...there wasn't any issue with preferring one child to another, my parents welcomed any child step,adopted whatever into the family.
Maybe they did but that is an issue between your brother and his/your parents. I am not sure how you can know for sure that they did because you can't know all that was said and done. I have an adopted son and maybe as an adopter I am quite sensitive about how people will treat him. But, as I also have a birth child too, dd. I know that my friends and family treat ds exactly like dd. If I only had an adopted child, I might not be able to be so sure! Just guessing.
Also, when an adopted child joins a family, as anything other than a very young baby they come in as a new 'person' trying to make relationships etc where as the existing children in the family already have ongoing relationships with granddad and grandma etc. A new baby is not expected to have quite the same 'relationship' with people IFSWIM! So whether the boy was a toddler or older it may have been a bit harder (for him, your brother and his wife) than than you realise.
You also say I think his wife is 'stuck up' she always was.
So you have views about your brother's wife which are negative, which he may or may not know about, which may or may not be true. Maybe you need to lay aside the thoughts about your brother's chosen life partner and just focus on your relationship with your brother.
What does I can't see how we all fit into the picture. mean? I am just confused?
You also said I do think if he is ready to move on he should do it with everyone, not just pick and choose which.
How can he do this, hold a big family meeting, have a big meal together? That sounds incredibly daunting after so long away from family. Maybe he will get back with everyone but he is starting with you, or maybe he just wants to be friendly with you. Either way that suggests he feels closes to you or that he feels you will be the most sympathetic to him.
And why can't people just say what they mean. I'm too honest with my feelings and have to say what I feel.
Not everyone can be honest and maybe they should not have to lay out in the open all their thoughts, especially if they feel the relationship between family members is as close as they would like it to be. Just maybe he does not know what he thinks or wants. Maybe someone close to him has been ill or died and he had realised that life is too short to hold a grudge for many years.
If you want to see him, see him.
Do not worry about the rest of the family.
If you all end up great friends you will have helped to make that happen, and if not you will have tried. Surely it is worth that.
And if not, then do not get back in touch (but that seems to me a wasted opportunity to me).
Best wishes.