How must you behave?

Your answer is correct because in this situation, you must slow down to walking pace immediately and remain ready to brake.

The reason is that this street is a "play street" (Spielstraße) or a zone where pedestrians and children have priority, and vehicles must not endanger them. The presence of a ball on the road often indicates that children might be nearby, so you need to slow down drastically to walking pace to be able to stop quickly if necessary. Remaining ready to brake is important because children could suddenly enter the street.

Driving past at the same speed would be dangerous and illegal in this context. Always adjust your speed and be prepared to stop when sharing the road in such zones.