I think the term nazi is commonly used in place of fascist. Its as though people treat them as interchangable terms and I don't think most people using "nazi" are actually referring to the political party and their actions, but rather fascism.
I'm actually Jewish (Polish and German Jews in fact) and our forefathers/mothers only just got out of those of countries by the skin of their teeth (their sisters and brothers were not so lucky) - and I have to admit I use "Nazi" occasionally. While I agree that most people most probably see it as representing fascism, I see it more as representing the attitude that something or someone is superior to something or someone else to the point of ridiculousness. The reason why I use it occasionally would be to belittle it (not the circumstances but that moronic attitude behind it). If I got all offended and upset by the term I would be continuing to give it power, which I refuse to do. So I use it as part of satire, to make fun of it, to reduce it in a sort of "F-you" kind of way. I guess that might not make a whole lot of sense to some people... Someone pointed out its use in Seinfeld, this could come from a similar logic seeing that Jerry is also a Jew and he wrote it, who knows. I think its use really depends upon the person, their reasons for using it and the situation.