The Rise of Neo-Nazi Far Right in Former East Germany

From my reading of it, which may be inaccurate but it's certainly what I've picked up on, you've two problems that are convolved:

1. After WWII, East Germany (and the rest of the Eastern Bloc states) were put into somewhat of a deep freeze politically - being placed under the control of what amounted to an authoritarian state without democracy. As such, political discussion was extremely limited and denazification never happened in the way it did in West Germany. So, when it came out of that deep freeze, there was a sizeable minority who have a very uncritical view of nazi philosophies.
2. Despite everything, German Reunification is only 32 years old. We are only seeing the first adults who have grown up entirely in a united Germany really since 2012 or so and there are inevitable time lags involved in reintegrating what is effectively a midsized country that was under communist rule and quite an oppressive regime for decades. There are economic gaps, skills and education gaps, wealth gaps, built environment gaps, and all sorts of issues that are only slowly moving forward. You also had a flight of people from the East to the West which was very pronounced in the 1990s but has faded by the 2020s to the point it's no longer a major phenomenon but it's likely caused a brain drain of more liberal types into the old West Germany or into Berlin, which is more of a phenomenon in its own right.

The simple reality of it is it will probably take another generation or maybe more for everything about the DDR and the gaps to completely disappear. The process was remarkably smooth considering how big a deal it was, but German Reunification was far from just a case of flipping a light switch and the DDR suddenly being exactly like every other part of the Bundesrepublik Deutschland.

On top of all of that, you've got a rise of far right nationalism across parts of Eastern Europe and I would suspect that a lot of that is also due to that same 'deep freeze' effect. They are very new democracies with only a few decades behind them and they're forming in an environment of online paranoia and general rise of extreme nationalism in bubbles around the world, including very influential places like US and (if you're in Eastern Europe) Russia.

I think, given the circumstances, those former Eastern Bloc states have done remarkably well and have achieved a hell of a lot in terms of their journey back to democracy and Western European style normality and a lot of that has been supported through EU membership, but I think sometimes we also perhaps expect sailing to be a lot smoother than it can be in reality given the very tight time scale. It's very easy to forget how recent their democracies are.

When you consider you'd a period from 1949 to 1990 in East Germany where political discussion was really not possible it's not all that surprising. It was an oppressive state, complete with a highly intrusive secret police force, heavy censorship and a dislike of any kind of discussion, so it's hardly a shock that there was little or no room for self-criticism or discussion of the past in any kind of robust way, at least outside of whatever top-down state dogma was at the time.

You've also got a couple of generations who undoubtedly felt quite hard done, having been basically handed over to spend decades as a puppet state of the USSR, with all the economic, social and other disadvantages and lack of basic liberty that came with that and Germany had it worse in some ways by having this mirror image, a highly prosperous version of itself, sitting over the other side of the Berlin Wall / inter-German Border.

I've heard that also feeds into an anger at the establishment by some far right sympathisers as they seem to blame so called liberal elites on absolutely everything.

There's a lot going on in German reunification that I think tends to get swept aside somewhat in how we tend to want to see it has having been entirely smooth.

A lot of Germany's more traditional industries (labor intensive) are based in East Germany, and so, there's less demand for workers to be highly skilled, as that's what the West is better known for. Immigrants coming into Germany are often going to be low-skilled, and so, will move to East Germany because that's where the work is for them. Also, there are a greater degree of social supports in the East, due to location (rather than ethnicity), which would make it attractive for some people who want to avail of the economic supports available, and the lower costs of living (naturally the West is more expensive a place to live).

And no, the people most appalled by foreigners aren't going to be those with the least exposure to them. Fact of the matter is that immigration populations are well distributed throughout both the West and the East due to the extended periods whereby Germany was a highly desired region for immigrants to head to.

Also, I lived near Frankfurt for a year (in the west), and trust me, many Germans were incredibly bitter/angry over the presence of the Turks in the city, and surrounding region. Exposure to migrant groups is not all roses and happy experiences. Many of the migrant groups have brought their own problems with them, which further encourages the dislike of foreigners by some/many. You've tried to show the natives as being unreasonable in their dislike of foreign groups, but there's been a lot of negatives associated with foreign groups in Europe, especially in terms of violent crime, human trafficking, and abuse. Sure, some of the opinions are baseless, and grounded in xenophobia, but in other cases, it reflects the behavior of foreign groups while in-country.