People in the communist quarter of Milan react to the officers, both the Italian officers and the American officer, with disdain. They shout anti-military slogans at the officers as they pass through the quarter. The people in this quarter are not interested in supporting the nationalist wars of America or Italy. They are interested in empowering and improving the lives of their fellow working class people, rather than idolizing military officers. The officers have all received medals and are used to be treated as heroes. The responses they receive from the people of the communist quarter of Milan stands in stark contrast with the manner in which they are normally received, and this interaction offers some insight into how poor people are so deeply affected by the realities of war.
I want to clarify your question. The men in the story are walking through a part of Milan during World War I. Milan and Italy were not Communist countries, but the soldiers are walking through a part of the town the is communist. They are despised for their medals and this helps intensify the feeling of isolation in the story.
The people despise the officers. The narrator recounts his experience with them as he and three other young officers would walk through town:
We walked the short way through the communist quarter because we were four together. The people hated us because we were officers, and from a wine-shop some one called out, "A basso gli ufficiali!" as we passed.
Roughly translated, the Italian phrase means "down with the military officers." The fact that the narrator is hated by these people emphasizes his isolation in this foreign country