Its a rather boorish reference to the Holocaust. I am more upset that you don't understand what this simple story is trying to convey. Maybe your school skipped over the WORLD WARS?

"red, with a white circle and a strange black cross in the middle." is the German military symbol "The Iron Cross" that date back to Prussia. The Nazi would use this symbol and wear armband to signal they were party member of the Nazi political organization that seized control of Germany during the post war period.

"yellow star on her chest" is the Star of David which was a six sided yellow star sewn onto Jewish people cloths during this time to make it easier to find and identify Jewish people. Which was required by law when the Nazi came into power in Post-war Germany.

It made easier for the Nazis to find and kill the Jews later on. And kill them they did.