I just think it is a dumb name like "Twee" is a dumb name for a genre. It's not that I hate the Twee genre or I am offended by the name. It's almost the same for "*****rock" except that "Kraut" comes with baggage.
https://en.m.wikipedia.org/wiki/Krautrock
As regards to it being highly offended, or is the term highly offensive, I am only acknowledging it can be offensive. I am not saying it is the worst derogatory in the world. I do take take in consideration there is a variance how offensive people see it. It's like Trollheart jokes, or when he use to speak like C. Montgomery Burns. Some people think his jokes and impersonations were funny, some people it's nonhumorous or unnecessary, and others are really bothered by his Mr Burns impersonation. I hope you understand the analogy.
The other problem with it is that it an umbrella term for German bands during 60s/70s regardless of their music style. To me it is a meaningless term. It can encompass bands that played in the style of Progressive Rock, Folk, Acid Folk, Experimental Rock, Experimental Electronica.
Kraftwerk, Bröselmachine, and Jane could technically pass as one genre? *****rock? So week after week people precisely discuss what bands are and are not in any given genre. They complain what bands should/shouldn't in a genre by how their music sounds, but once you step outside the Anglophonic world you can't tell the difference. Someone is singing in another language so the music sounds all the same. "When they sing in English I am ****ing genre mastermind, but wait a minute dawg they are singing in another language, I can't tell what their music is."