This seams to be disagreement what free speech is. Here an insult is never free speech, it is simply an infraction on "the personal honor" of someone else (although nobody uses this old-fashioned term). It is however free speech, if the claim is actually true (same for defamation). This is why now courts are arguing whether some "insult" is justified.

I think this is a very good thing. Ultimately laws and judiciary exist to be a formalism for personal fights. This is intended to make violence unneeded, so that we can have trust in the society. This is why the police has a monopoly on violence: Not because they are special and to be trusted, but because less people being violent is always better. If someone is calling you a Nazi, you might be tempted to punch back. This will lead to violence on the streets. If how ever you have a way to settle this legally, then you are much more able to walk away proudly and have satisfaction in calling your lawyer.

> invocation of "Nazi" is always useful to quickly illustrate that you're arguing with an idiot

This is a bit more serious here (Germany), since being a Nazi is punishable, so you're accusing someone of a crime.