Legally, they don't have to abide by Germany's laws at all. Since the site is hosted in the US, US laws apply. The only things Germany could do are either to block the host, or put in a formal request with US authorities to take it down for diplomatic reasons. However, the host got a request from the government of a sovereign state stating they delete or block a specific site, and I don't think the host wants to a) pick this particular hill to die on, and b) they don't want to lose all of Germany as clients/visitors to their sites when Germany decides to block all traffic going to them.
I don't know of a host that wouldn't take that deal.
Sucks for us, though.