Distracting is just another way of saying noticeable. Within reason, it's a very good thing for cyclists to "distract" drivers and attract attention. I notice blinking lights on bicycles when I'm driving. I find nonblinking lights on cycles much harder to notice. 99% of the time, I'm looking for two extremely bright headlights, e.g. cars. When they approach, I notice. Cyclists with solid lights (especially a single light) are much less noticeable. Cyclists with a blinking light don't follow the normal pattern, and attract so I notice them.

If blinking lights are illegal in Germany, then I think they got it wrong. What's the likelihood that a crash happens because a driver was distracted by a cyclists lights vs the likelihood that a crash happens because a driver did not see a cyclist? Some limits on blinking lights are probably reasonable (if you look like a nightclub, it's probably reached the point of dangerously distracting), but an outright ban seems wrong.