Do language skills impair students' ability to assess their skill in other subjects?
I've taught esl  for international students trying to get into graduate school. One thing that I noticed is that the students did not know there is a difference between conversational English and academic English. They were totally convinced that since they could tell me their name and where the bathroom is that they were ready to begin graduate school. Literal ideas are easy to share in a second language but abstract ideas require real mastery.

Perhaps in your situation the students have the same misunderstanding in regards to conversational and academic German. When you lack expertise in any subject everything tends to look the same. 

Another potential concern could be language ego which essentially means that nobody wants to look dumb using another language. This may also cause students to inflate their language ability in order to fake competence they lack. Toning down the complex German and explaining everything in the simplest way possible with the simplest words will encourage them to indicate when they don't get it.