Panoramafreiheit also covers picture containing people as long as they aren't the focus or reason of the image, but things get more complicated there (and individual cases could override things). The blurring of people, name plates, license plates and the like (which already existed, that wasn't driven by German concerns) helps a lot in that regard.

Blurring entire buildings was the compromise made specifically for Germany[1], but that was used so much that further bring-up of Street View probably wasn't worth their while. And that was to some degree due to the media frenzy back in the day. I mean, some people actually thought it would be live video of every location! (yes, Germany has its share of tech-illiterate hillbillies, and wow, are they vocal...)

So now Google tries again and crossed all the t's and dotted all the i's and this article has the following to say about this: "In a somewhat transparent attempt to avoid the same issues as in 2010 and 2011, Google is working alongside a German privacy commission this time", as if working with the DPAs is something sinister. "somewhat transparent attempt", really?

You just can't please some people...

[1] Side note: France doesn't have an equivalent to the freedom of panorama, and stuff like the illumination pattern of the Eiffel tower falls under copyright, with cases prosecuted for that. Yet it was pretty much fully visible on Street View from early on.