This has nothing to do with living in a free world. It's just that we germans are (unterstandably) a little bit touchy about certain symbols of our past.
Which means that there are a small number of symbols that you are not allowed to display without the occasion being in a critical or scientific way but in a setting that might be used to glorify the symbols and the system they stood for. Among these are the swastika, the SS-Runes and the old german war-flag.
Americans have these kinds of forbidden symbols too. They are taboo and displaying them will result in social and/or penal sanctions. I am thinking of the N*-word to describe people of color, a burning American flag, the confederate flag and others. Using these Symbols in the wrong context will get you in any number of troubles in America, free speech or not.
When it comes to violence in games there are another number of rules which I find quite strict sometimes, but must admit that the idea behind them is rather sound.
- You may not make graphic depictions of violence against humans (hence the 'red blood thing') available to minors unter the age of 18. If they are too graphic, you may not even advertise them in a way that may make minors aware of the game and their content.
I know it won't work like this with kid's being kid's and nosey and all, but you can't fault us for trying to minimise their exposure to violence before they are old enough to be be deemed able to handle this kind of exposure.
While there are some restrictions on displaying images of sexual content to children, they are by far not as prudish or paranoid as some of the rules and decisions I've heard from the Land of the Free lately.
just my 2 Pfennige