Haha, it appears that there are some misconceptions about this law in other countries. First of all, as far as graphical content goes, only the swastika is subject to it (and maybe other symbols such as SS insignia?), not other Nazi stuff (such as pictures of Hitler and so on).
But CaterpillarKing is on the right track, there is some sort of "fair use" clause included in this law which basically allows you to use it whenever it is required for accurate historical portrayals. It's hard to educate people about the Nazi era when all of your history books are censored. Entertainment media usually fall under this as well*, so it's not as if the German versions of Indiana Jones or Inglorious Bastards are visually edited or anything (also I'm sure that there are a couple of swastikas in Downfall, which is even a German movie).
The law is rarely enforced anyway, and courts are usually quite good in figuring out whether the intent of the law applies to given situation, i.e. if Nazi imagery is used to either glorify or downplay Nazi ideology. For instance, sew-on badges like this:
are pretty popular for example in the punk/left-alternative scene, and a couple of years ago a politician was sued for wearing one of them. The case ended up being thrown out.
In the case of DoC it's also because it's a mod that nobody really cares about (in the grand scheme of things) which is also hosted on an American online forum, so I don't even know if German law applies in this case.
*hilariously, there was a show on German TV that was all about parodying popular TV shows and one of the best of their segments was basically The Office with Hitler as the self-important yet incompetent protagonist. It featured swastika-patterned carpets and ties and ridiculous stuff like that, one episode even was about how Hitler was too incompetent/lazy to fix the "swastika key" on their typewriter so they ended up producing a million flags with the hash sign on it.