For Benjamin, art no longer has the aura it once had. Due largely to the increased secularization of society, the work of art is no longer thought of as a manifestation of spiritual values, as something that reveals timeless truths. In addition, the rapid development of technology in modern society has turned artworks into commodities, mass-produced commercial products that have no worth or meaning.
In this ever-changing society, aesthetic perception has changed dramatically. Now that the aura has been removed from works of art, other aspects of human life have become aestheticized, treated as if they were works of art. One such aspect is politics, which under Fascist regimes has been turned into an art form. One only has to think of the parades, the flags, the uniforms, the minutely-choreographed rallies that were a common feature of Fascist regimes to see the point that Benjamin is making here.
The aesthetic theory of "art for art's sake," so beloved of late-19th century aesthetes such as Oscar Wilde, has finally culminated in the aesthetics of Fascism. Separating art from the stream of life has cut off art from what is true and vital. This had made it more susceptible to becoming just another commodity to be bought and sold in capitalist society. As art no longer has any deep roots in the wider culture, it can be cynically distorted and coopted by various interest groups—capitalists, Fascists, and so on—to serve specific ends.
As art has become little more than a commodity in an age of mechanical reproduction, humankind has become alienated from itself, contemplating its own false image instead of what is true. Art no longer serves the purpose of showing us what is distinctively human. Because it has been commodified and mechanized, it has become a means to an end.
And Fascist regimes have been particularly adept at exploiting this unfortunate development, giving their nefarious activities an aesthetic facade. This means, among other things, that humankind's very annihilation, as embodied by Fascism, can be contemplated as an object of supreme aesthetic pleasure, as if it were a work of art.