What possible purpose can this serve?

In a recent post, I asked whether all those brave folk standing up for the liberation of Palestine really believed that there could be freedom and justice for Palestinians if there was no freedom and justice for Gunther Deckert.I was prompted to post it because, a few moments before, I had read that Gunther Deckert had just been sentenced to five months in jail because he translated from Italian into German an essay by the Italian revisionist researcher Carlo Mattogno which questioned the Holocaust narrative.
I’m glad to say I’ve had no experience of Germany’s ‘Incitement of the Masses’ laws (Holocaust denial to you and me) and quite honestly, I found it all a bit hard to believe. Surely Mr Deckert must have done something worse than just translating a revisionist document into German that to merit such a sentence.
Then, some days later, I received the following exchange which does clarify things a bit. It’s between a Mr William Henderson of Toronto, Canada and Georg Jürgens, Minister-Counsellor and Deputy Head of Mission to the German Embassy in Canada.
Mr Henderson wrote:

Your Excellency:
I note from an RSS feed that I subscribe to that Gunther Deckert is due to report to prison for a five month term early in the new year.
Further inquiry reveals that his crime was to translate a document from Italian into German.
It seems to me that a jail sentence for the mere translation of a document is somewhat ridiculous.
Could you please advise me what harm a simple document could do and why the matter would even be of any interest to the German authorities?
Respectfully,
William E. Henderson

And Mr Jurgens replied:

Dear Mr Henderson,
It exceeds the capacity of this Embassy to find out exactly what the notorious neo-nazi Deckert did this time.
To get an idea about this man you might want to check him out on Wikipedia: http://en.wikipedia.org/wiki/G%C3%BCnter_Deckert
Just let me add that if you translate foreign documents to deny the Holocaust or to incite racial hatred you are punishable under German law.
Kind regards,
Georg Jürgens
Minister-Counsellor and Deputy Head of Mission
Embassy of the Federal Republic of Germany

So, it’s true.  “If you translate foreign documents to deny the Holocaust or to incite racial hatred you are punishable under German law.”

Two questions remain: 

1. Why is questioning the Holocaust “incitememt to racial hatred”?

2. In this globalised, internet age, when national boundaries mean nothing and English reigns supreme, what possible purpose can this serve other than to further cow a terrified population?