1- In Bradbury's Fahrenheit 451, all books are banned and burned upon discovery. In the Nazi Germany, books considered to be subversive to the regime would be burned to keep the population from generating ideologies that could challenge Nazism.
2- Was Bradbury correct in his literal interpretation of “Where they burn books, they will also ultimately burn people.”? In some way, yes. When knowledge is not only limited, but also controlled, the people tied to it are led to their demise. Just like in the novel, people in Nazi Germany who owned subversive books were punished not only by the burning of their property, but also by the discrimination that followed after such a public form of consequence. If a person was seen being confiscated subversive books, they may be considered as an ally to the Jews, which meant pretty much the same as being the enemy back then. Because of the extreme exclusion and suffering that followed this punishment, it's almost like dying a slow death.
In this way, the phrase “Where they burn books, they will also ultimately burn people.” is both literal and figurative.