'We definitely messed up': why did Google's AI make offensive historical images?

They were not offensive. The only offensive thing about them was their stupidity. Nobody who criticized those images was "offended"- most were just laughing and shaking their heads in disbelief.

Describing the images as offensive is an attempt to frame the issue to suit the same ideology that produced it in the first place: the ideology that puts feelings at its center, ignoring things such as correctness and truth.