Let's say we are studying the integrated near-infrared (NIR) light of a distant spiral galaxy. We would expect most of this light to be dominated by red giants stars and dwarfs. I assumed these stars would radiate thermally but a source online states only the mid (MIR) and far (FIR) infrared radiate thermally. Can anyone clarify how objects in the NIR radiate? I would think it would be blackbody radiation but perhaps I am wrong.
Your source is mistaken. Almost all the radiation we see from stars is "thermal". That is, the radiation arises from material where the occupation of energy states in atoms, molecules and particle speeds is characterised by a temperature. This includes emission from the photosphere, chromospheres and coronae of stars.
In the case of the 1-5 micron emission referred to as "near infrared", that emission is predominantly from the photospheres of stars (both hot stars and cool stars) and it can also arise in warm dust surrounding a star (e.g. a thick, protoplanetary disc).
The only "non-thermal" radiation you get from stars can come at radio and hard X-ray wavelengths. This is associated with the acceleration of charged particles by magnetic fields in the corona.
I also noted another strange statement to the effect that stars fade in the mid and far infrared. The basic physics of blackbody radiation (stars approximate to blackbodies, especially in the infrared) is that they emit at all wavelengths. Whilst the peak of a hotter blackbody would be at shorter wavelengths than a cooler object, the hotter body will be brighter (per unit area) than a cooler body at all wavelengths. i.e., A star is brighter than a planet at all wavelengths, although the contrast will be lower in the mid and far infrared.