This was the mythological account used by the Nazis to justify their entitlement to territory. German identity was tied both to racial purity and to a particular land, so much so that removing the people from the land or the land from the people constituted an ontological rupture.
This connection was seen as an almost mystical thing. Racial purity and a specific land were linked together in a way that could not be completely articulated, but had enormous force among the German population of the time.
It also meant that if you were German, no matter where you lived, you were connected to the land. The soil was in your blood. And, to the extent that you mixed your "Germanity" with "inferior" races, you lost your mystical connection to the soil. You could not understand, as a native could, the entitlement and significance of the German soil.
See: Fascist Ecology, particularly the section called "Blood and Soil as Official Doctrine"