I'd have to read her responses to the criticism she got again, I believe she did walk back the extent of her claims, but could be wrong (and in saying this, I'm sure someone will correct me if I am misremembering ;))
You can probably see how option A is a propaganda win for Nazism (and fascism in general). 'See, you're not so different to us!'. Was it the German people who became Nazis overnight, or did the Nazi elites (such as Eichmann) instigate what amounted to major social engineering campaigns?
That's why seemingly democratic societies can turn into regimes almost overnight.
Well, yes it was, because it was engineered. The Nazis never won a majority in any election, but once they were in power they were famous for their social engineering and propaganda. They're a classic example of how a minority of people in a population can absolutely gain control over everyone else and bend the majority to their will using highly cynical but intelligent tactics.
That's a personal interpretation. In fact, in many ways it doesn't discount it but actually inspires them, asserting that without such efforts society is likely to backslide into fascism fairly easily. Which tbh, if you've lived in the US from 2001 to 2005, or today in Russia or Hungary, you've basically experienced already.
That does not mean that society carries all responsibility for the actions of this or that person, of course, that's never the case. What the banality of evil tells us is that society contains the conceptual germs for behaviour that can turn atrocious, when brought to extreme lengths by this or that individual.