Skeleon said:
It is pretty bizarre. Take the Nazi symbols, for instance: Movies like Raiders of the Lost Ark feature them and nobody cares because it's a movie, it's considered art. But a video game like Wolfenstein 3D gets put on the index in Germany and the game Raiders of the Lost Ark had all its swastikas replaced by black circles.
The swastika part is actually based on regulations that are already (or still, depending how you look at it) in place - it's not the like the Bundestag have a look at every game that's about to come out once a week and decide what is to be banned and what isn't. In very simple terms: Stuff that has a swastika on it is illegal to import, distribute or hold for distribution. Excluded from this is if the medium in question serves educational, artistic or scientific purposes, so movies are alright, which is why we can watch Raiders of the Lost Ark uncensored over here. Video games on the other hand still aren't considered art; that part isn't in the law, but no court has yet ruled differently. In minor cases - like keeping a copy of an uncensored game at home - you will usually not get charged with anything, but the distributors will land themselves in legal hot water if the import and distribute uncensored games.
The reason why the courts have difficulty ruling any any way is that a) it'll open a whole other can of worms (if games are being considered art in this context, they'll have to be treated the same way in any other context as well, and b) in Germany, nobody wants to be the guy to be lenient toward Nazi stuff. Still a touchy subject here.
The matter of 'indexing' and confiscated stuff is a different matter. Games that make it to the index can't be openly advertised and easily sold, which is bad for making money from them, so you either censor your game or you accept significant financial losses...