I was looking for a definition to "sand niggers" and found this
It makes sense to refer to Arabs as sand niggers because of the desert and dark skin but what is a sand nazi? it makes no sense at all.
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The site that you found that on is UrbanDictionary. On that site, people write their own definitions. I think this may be somebody trying to be funny or something. "Sand nazis" isn't any sort of term, derogatory or not.
Take a look at the upvotes/downvotes on that definition - 50 up, ~100 down. It's not a very good definition.
I would recommend not reading too much into Urban dictionary definitions in the future. They aren't really curated, they are written by anyone and everyone, and many times there are jokes within them. It is a good site to get a feel for what a certain slang word means, but other than that, it isn't that great.
By 'sand Nazi', the writer refers most likely to groups in the vein of ISIS and Al-Qaeda: terrorist organizations and the like. Because they have policies that are compared to Nazis, they are metaphorically called Nazis. Be aware that this is not an established term and should probably be avoided in formal setting, although you will probably be understood.