[ernesth]

There is nothing more to it: Project Gutenberg distributed books in Germany that are not in the Public Domain there. The rights holder sued. PG was condemned to stop distributing those books in Germany. PG complied by blocking the whole site in Germany.

No country has the same copyright law as USA. In those other countries, Project Gutenberg has not yet been sued. (Edit: and probably in some countries, people downloading from PG would be the only one in illegality, not PG)

For example Alfred Döblin's and Thomas Mann's books are not in the public domain in all of Europe, in most of South America, or in Australia.