That’s wrong. Wearing headphones is not banned. Isolating yourself to a degree where you cannot hear warning signals (emergency vehicles, car horns) is (10 € fine), though that’s not the same as being able to hear all traffic sounds (which would be non-sensical, given that cars are and have been for a very long time quite sound isolating. Horns and emergency vehicles are two of the only things that really get through.)

In practice this means that police won’t do anything about people wearing headphones. Wearing them is totally fine. However, if you get into an accident you might get a larger part of the blame if it’s determined that you not hearing so well contributed to the accident. (The rules of the road do have a general clause that you need to pay sufficient attention – so anything distracting might get you to shoulder more of a blame in case of an accident, even if it isn’t explicitly banned. Use common sense …)

As I said, cars are inherently quite isolating, so car-centric maniacs better try not to legislate my right to wear headphones while riding the bike aways while they sit in their sound dampened boxes, casually overtaking me with too little distance.

(I strongly suggest to never turn on noise isolation while riding the human powered kind of bike and I also recommend either turning on the pass-through mode or just putting in the earphone on the side away from the road.)