The upside for them is that they take us with them. If the Russian gov't thinks it is going to be destroyed, they will launch. Fortunately, we are pretty far away from that right now. Russia just keeps making it clear - "If you kill us, we're taking you with us."
Putin is brutal dictator. I really don't think he is bluffing about this. If you are wrong, we all die.
Russia is not saying, "give us Ukraine or we launch nuclear missles." They are saying, "Do not threaten to destroy our nation or we will launch nuclear missles."