Death is remembering the third and final time it sees the book thief (alive, that is).
The sky is on fire; this time it's red, with black burned parts.
Death can still hear the children that were playing in the street before the bomb drops.
Blood and bodies are all over the road now.
Death asks if all these people are dead because of "fate" (4.7).
Now Death answers the question:
Of course not.
Let's not be stupid.
It probably had more to do with the hurled bombs, thrown down by humans hiding in the clouds. (4.10-12)
The small German town has been bombed.
Death sees the book thief, in the middle of a "mountain range of rubble" (4.16), holding tightly to a book.
From the look on her face, Death can see how much she wishes she could "go back to the basement, to write, or to read through her story one last time" (4.17).
Well, there is no basement anymore. It's now "part of the mangled landscape" (4.17).
Death wants to comfort the book thief, but it isn't "allowed" (4.22) to do this.
So, Death watches her and follows her when she begins walking.
Death watches as the book falls from her hands and she begins to scream.
Death watches as the book is walked on and then tossed in a trash truck by the cleanup crew.
Now, Death jumps on the trash truck, and takes the book, a book that Death will read it "several thousand times over the years" (4.28).
When Death thinks about the book thief, he thinks of the three colors and three symbols: a red rectangle, a white circle, and a black swastika.
Death is describing the Nazi flag, designed by Adolf Hitler. You'll hear much more about Hitler as the story goes on. As you've probably figured out by now, the book is set during World War II in Germany.
The swastika, a cross with bent arms, is an ancient symbol. The word "swastika" comes from the Sanskrit (an ancient language of India) and means "good fortune" (source).
Since the Nazi Party used the symbol in its flag, its meaning has become perverted. Instead of a symbol of good fortune it's become, primarily, a symbol of the Holocaust.
In any case, Death thinks about the book thief a lot and has "kept her story to retell" (4.30). It's one of many stories Death keeps and tries to tell.
Why does Death retell these stories:
"To prove to [itself] that you, and your human existence, are worth it" (4.32).
Now, Death wants us to follow it, and listen to the story of the book thief, which is called "The Book Thief" (4.33).
Death wants us to see some things.
(As with Chapter 3, we learn the meaning of Chapter 4 much later in the novel, so keep it in mind.)