You can have games with Nazis in it in Germany. But it has to be censored and all Nazi symbology has to be replaced or removed.
For example, the new Wolfenstein game from Bethesda is available, but the swastikas in the German version are replaced by the stylized "W" from "Wolfenstein", and "SS" symbols like the deathshead or the "SS" itself have been removed entirely.
Also, one scene where you wake up in a gas chamber surrounded by corpses has been altered and all corpses have been removed.
The original "Wolfenstein 3D" was completely banned in Germany, because there was no censored version available.
Personally, I think that is bullshit. Nazi symbols are generally illegal in Germany, but allowed under special circumstances such as for "artistic purposes". But then for some reason, they don't have to be removed from movies, such as Indiana Jones... I really don't see the justification for allowing it in movies but forbidding it in video games.
But that's not all. Extreme kinds of violence in videgames are almost always also banned in Germany unless softened for the German market. Fallout 3 for example, where you can blow up individual body parts, is also altered to be less violent.