Why is one a "nazi flag" while the other is just homage to the dead people who fought in a senseless war?
A fascinating, and irrelevant, straw man.
Neither flag, particularly, is enthralling in its history. However, the authentic battle flags at least have an excuse that you are memorializing those of your state or your relation who did what they perceived to be their duty. The flag is still distasteful as ultimately the symbol of the bizarre idea of a republic founded on preserving slavery, but it is also on some level defensible as a banner under which the future of mankind was expressed at Hampton Roads and Petersburg, great deeds were performed, and many died in what they thought was the defense of hearth and home. If someone chooses to fly an authentic flag over a memorial to Confederate dead or display it out of respect for ancestors who fell, this is something about which I think reasonable people can disagree. I am myself of two minds on the subject as this probably makes clear. (While I personally find it too distasteful to want to ever make a personal display, despite a family history that is mildly distinguished in its service to the Confederacy, I do not
necessarily have objection to others doing so. There are of course ways to quickly cause such objection to develop.)
The elongated version, as I commented before and which you have conveniently forgotten by the time of this post, does not actually match the naval ensign (stars and layout of them, also general shape of the rectangle) or anything save a prototype considered for the national flag of the Confederacy that was not selected, and was introduced to widespread use only in the late '50s and early '60s to provide a symbol for resistance to civil rights and the federal government. (Before that point only a single example existed.) The only people who died as result of that flag were black; the only way in which they died was at best "civil unrest" rather than "active combat". Its history includes no great acts of bravery or world-altering moments. The flag, as I have now pointed out twice, is not really a flag of the Confederate States of America. It has been imbued with that meaning as a defense, but it is not a meaning it has any legitimate title to.
And on the other hand, there is also the fact that even if it was accepted to be "a Confederate flag" it is not the flag those being memorialized supposedly would recognize or have fought under. While it is a dangerous thing to argue emotional attachment should necessarily make sense, I think that in general we can all agree that if we are attempting to be respectful it behooves us to do so with an eye towards performing respectful acts with the correct implements and behavior. It would be perceived as a grave insult by most veterans to fly the flag of the wrong nation or even the wrong service over war dead, yet that is in effect what is being done. A great deal of my contempt for the argument to preserve the elongated flag stems from this.