Answer:
When the speaker says those lines, he meant to show the false hope and optimistic expectation of the Jews of Sighet despite Hitler's plans of extermination.
Step-by-step explanation:
Elie Wiesel's memoir "Night" is a personal recollection of the Jewish persecution by the Germans. In it, he tells of how the Nazis had tortured and tried to bring about the complete annihilation of the Jewish race.
When the speaker says,"The Germans were already in our town, the Fascists were already in power, the verdict was already out—and the Jews of Sighet were still smiling", he seems to refer to the false optimism of the Jewish people. The Jewish people had false hope among themselves and had refused to escape while they had time. Then again, this false hope that the army of Hitler won't be able to reach them. So, the Jews of Sighet were still smiling, thinking they're safe from the possible capture and annihilation plans of the Germans.