"he writes when it grows dark to Deutschland your golden hair Marguerite
he writes it and steps out of doors and the stars are all sparkling"
This quote from the poem emphasizes the way in which the guard is completely oblivious to the suffering he is perpetrating on his prisoners. It juxtaposes extreme beauty and the enjoyment of it with the worst kind of ugliness and horror. It also shows that to the guard, murdering and torturing prisoners is like his day job. When he finishes for the day he focuses on his passions, art, music and literature. He is also still able to see beauty in the world around him, shown by the mentioning of the stars that are sparkling. Stars have a certain romantic magic to them and he is able to see that. He looks only up.
The quote also indicates that by writing to Deutschland when he is thinking of Marguerite that she is symbolizing the Nazi ideal - Marguerite IS Germany in his eyes, and his obsession with her shows his total loyalty to the Nazi mission and regime.
"He shouts play death more sweetly Death is a master from Deutschland"
For the prisoners there is nothing about the camp that reminds them they are alive, but everything about the camp reminds them that they will soon be dead. The camp is death for the Jews, both individually, and for the race as a whole. The man is shouting for death because he wants to kill more Jews, and the fact that Death is a master from Deutschland shows that the death of the Jews is the intention of the Germans, and that he is not one rogue guard killing because of his own personal ideals; he is completely in line with the hierarchy with whom he identifies.
"you'll rise then in smoke to the sky
you'll have a grave then in the clouds there you won't lie too cramped"
The grave in the clouds tells us that although the prisoners are digging actual graves in the ground, they are most likely to be killed and burned, which is why their graves will be in the clouds. The fact that they are not going to be cramped refers both to this (the sky is not cramped) and also to the way in which death would be a relief from the way in which they are crammed into huts and forced to live like cattle waiting to be sold. In camps they lie cramped, but in death they will not have to. The poet is showing the reader that for the prisoners, death is an improvement on life.
