The argument is that since the Nazi will inevitably punch you, preemptively punching the Nazi is inherently defensive, and thus urging people to punch Nazis is not hate speech.
Of course, you may very well ask, isn't it trivial to construct an almost identical argument to justify violence against almost any particular category of people you'd care to name? Hopefully your interlocutor won't respond by punching you in the face.
Speech promoting violence against some group of people, and not for defense purposes. No subjectivity there.