I think "dust" is a term of art in astronomy. A cloud of rocks the size of cars could be dust. I suppose that if you can't resolve the particles, then it's dust.
If I look at this part of the Orion Nebula, it looks opaque; I can't see what's behind it. So I guess if I were in the middle of the nebula, then I wouldn't be able to see out of it. There are many stars in the nebula that are not visible (in visible light).
So I suppose that what you'd see would depend on where in the nebula you were sitting; if you were near a star, the dust would be illuminated, and the sky would be bright. If you were not near a star, presumably the sky would be dark, and you'd look up and see nothing, like the inhabitants of the planet Cricket.
There are multiple types of nebulae. Absorption nebula (or dark nebula) and reflection nebula are clouds of "dust" (more likely lots of rocks).
There are also emission nebula which are clouds of ionized gases that emit light.
The horsehead nebula is an absorption nebula that sits in front of light-emitting emission nebula. It's fairly easy to image the horsehead with a star tracker and DSLR, though not to this level of detail.
