Freedom of religion only goes so far, because the culture of the host country takes precedence. To take it to the extreme, if there were a religion where part of standard practice involved assaulting women and children, we would obviously limit those practices.
Non-consensual violence is prohibited because it directly harms other people. Face coverings don't directly harm anyone and laws that exist only for the government's convenience are authoritarian laws. There are ways to investigate bank robberies even if the robbers are wearing masks and in fact a law against masks is fairly ridiculous because anyone willing to break the law against robbing banks would be willing to break a law against wearing a face covering, so such laws only afflict innocent people.
With this type of logic, all laws authoritarian then, like speeding laws, theft laws, and anything else that prevents you from doing what you want to do becomes authoritarian.
The ban on swastikas would be considered authoritarian because it's only purpose is to limit expression.
Considering Germany's recent history though, it seems like a reasonable response.
You don't want the government to have the power to decide things like that. It's better that they censor nothing.
How would the world react if Germany decided to repel such law? It doesn't paint a good picture