In Nazi Germany, Jewish people were required to wear the yellow star as a symbol of their faith and degraded social status. The "road of yellow stars" is a nickname given to Schiller Strasse, a street within a Jewish neighborhood in Liesel's hometown. Since the Nazi takeover, the houses have been the target of vandalism and abuse. A yellow star has been painted on each door. The houses "seem like lepers" or "open sores" on the German land. Perhaps because of that, the street is an object of fascination, something distressing or ugly that one feels compelled to look at nevertheless.
The "road of yellow stars" is evidence of the antisemitism and growing violence of Nazi rule. Not only have the houses been brutalized, but the people who live there have been dehumanized as well. When Liesel passes the street in the company of Rudy and the other Steiner children, she and Rudy stop and stare. She sees "shapes" moving in the street. These people seemed more like ghosts than people. Later in the novel, these houses are ransacked again, as the Nazis search for fuel for their book-burning ceremony.
What fascinates Liesel and Rudy about the street how it is unequivocal evidence of Nazi-sponsored race hatred. While they might not understand it in those terms, what they see foreshadows many of the horrors that come to pass in the book.