Indeed. The NPD is stupid enough to be a true wink-wink Neo-Nazi party. To be legally safe in Germany, you can still advocate all the same bigoted policies, you just have to disassociate yourself from the actual Hitler worshipers, and very slightly modulate your rhetoric which incites racial hatred.

Indeed. Part of the investigation is if the NPD party is even big and relevant enough to cause the harm that it is accused of. Based on the March/3rd questioning I'd say it is, but I'm not following too closely.

weren't the nazis the ones who banned political parties? It seems merkel is being a bit... fascist.

Please stop comparing the current German government with fascists.

Trying to ban a political party in the open after year (decade?) long preparation is very different from taking all civil liberties (freedom of expression, freedom of press, freedom to assemble) and putting political opponents in prison (https://en.wikipedia.org/wiki/Reichstag_Fire_Decree 1933)