So for example "I am offended by the idea that Nazi Germany is a desirable place/time to live." I don't know how that fits in here or if we could consider it a misuse of the term.

If someone were to speak favorably of Nazi Germany in your presence and you appeared to assent, that would impugn your morality and lower your status in your social circle, so you have to take offense and make clear to everyone around that you are absolutely not in favor of Nazi Germany. I think this is basically the same example as being offended by vulgar language. You want to avoid lowering your status by association with anything vulgar.