Please explain this quote from "Night": "The ghetto was ruled by neither German nor Jew; it was ruled by delusion."

Perhaps this poem attributed to Pastor Martin Niemoller might help you understand:

When the Nazis came for the communists,
I remained silent;
I was not a communist.

When they locked up the social democrats,
I remained silent;
I was not a social democrat.

When they came for the trade unionists,
I did not speak out;
I was not a trade unionist.

When they came for the Jews,
I remained silent;
I wasn't a Jew.

When they came for me,
there was no one left to speak out.

The laws that were imposed on the Jews did not seem so bad...the wearing of stars, the closing of businesses, the moving to ghettos...none of this meant death.  It was a gradual process that the Jews didn't realize the seriousness of until it was much too late to act.  As a peaceful people, the Jews expected that the restrictions put on them were tolerable and would soon end.  They did not in their wildest dreams think of the possibilities of concentration camps, torture, starvation, and death.  Had they seen a glimpse into this future, I am quite certain they would have rebelled most violently.