> One kid with a hidden listening device could be in the vicinity of other kids whom it overhears, whose parents did not consent.

This ban doesn't solve that problem though. A child could wear an adult smartwatch that has a listening capability.

Which are just as illegal. The "ban" here is just the regulatory agency clarifying/informing the public that these products have been sold but are not legal to possess under existing laws in Germany.

That would be illegal (it's also generally not a feature on adult smart watches to have someone else quietly activate the microphone and listen in)