The narrator's telling Ishmael about a paper he once wrote for philosophy class. In that paper, he put forward a thought experiment based on the fantasy scenario of a complete take-over of the world by Hitler and the Nazis.
In this scenario, the Nazis manage to wipe out every race on earth except the Aryans, the people that the Nazis believed to be the master race. As there are no other races and no other political ideologies, they are not mentioned in history textbooks. After successive generations of total Nazi rule, no one could've put anything different into the textbooks even if they'd wanted to because no one knew anything different.
One day, a couple of Aryan students at the University of New Heidelberg in Tokyo called Kurt and Hans are having a chat. It's obvious to Hans that something's up with Kurt, so he asks him what's wrong. Kurt replies that there's something troubling him, that he can't shake off the feeling that there's some small thing they're being lied to about.
The small thing in question is the historical account that Kurt and successive generations of people have been given. Those in authority have been lying to them all this time, giving them the false impression that Aryans have always been the only race upon the earth and Nazism the only political ideology.