What should you do?

You answered correctly. In Germany, when you see pedestrians waiting at a marked crosswalk (Zebrastreifen), you must always stop and allow them to cross, even if you think you have time to pass before they step into the road. The rule is designed to protect pedestrians and ensure their right of way at crosswalks. Continuing to drive, even when pedestrians have not yet entered your lane, is not allowed if they clearly intend to cross. Always wait patiently until the crosswalk is clear before driving on. This rule applies regardless of which side of the street the pedestrians are waiting on.