The government is incompetent and the Nazis are playing them like a fiddle by setting the public agenda aided by incompetent and complicit media. (That the Nazis’ economic agenda, more money for the rich, isn’t all that differnet from that of the established parties helps with this, because this renders them unable of countering the Nazis’ lies about foreigners being to blame for the economic hardships of the masses without harming themselves)
The government consists of greedy, power hungry bastards who think they can use the Nazis to their advantage. (Some lie to themselves that they can steal votes from them by parroting their rhetoric, some use the spectre of cooperating with the Nazis to pressure other parties into cooperation with them instead)
The government consists of opportunistic cowards who are afraid of angering the Nazi voters and/or losing the court case for a ban of the Nazi party.
There are multiple factors at play.