I tend to give facts (when asked) in as neutral a way as possible, and I do answer and I do tell the truth - albeit in as age-appropriate way as possible.
A bit as if presented by Horrible Histories, I suppose?!
I would just answer a) because he was insane b) yes and c) I don't know, I think. Then add that it must be hugely sad for best friend's grandparents, who could remember all of that (and the lost relatives), but that best friend herself is living a long, long time after it all. I would reinforce 'you don't live then', that Hitler doesn't live now, and that whole countries went to war to stop him - and they won.
dh is Jewish, my father is Jewish, dd1 (nearly 9) knows the absolute basics ie that there was a mad German called Hitler who decided Jews were 'wrong' and decided to kill them all. I stress that it was a long time ago, that our family never lived in Germany, and that yes it was absolutely, hugely awful and almost impossible for us, today, to imagine, and that it was stopped in the end. So I don't minimize it, but I don't go on about it and I place it in history - where it can't hurt her, iyswim.
dd1 still won't watch Bambi because it will make her 'too sad', but is quite resilient if told straight facts that don't actually impact on her or close family/friends, and has never brooded on the Holocaust at all....then again, she thinks I am 'ten thousand years old' so anything that happened last century is almost like a fairy tale!
OTOH, if your dd is talking about it a lot....I did just wonder if her friend is having a more emotional time of it (which she well might), and if her friend's emotions, rather than the actual facts, are affecting your dd? In which case, I would tackle it a bit differently I think...