Well it all depends on what their goals are for their military. If they plan on constant foreign deployment like the US, then a larger more mobile military is necessary. If only for defense, then maybe not so stupid. Unfortunately since German politics isn't my strong point, I have no idea where they're headed.
Rather neither one, or probably somewhere in between.
A sarcastic answer would be: have an armed aid organisation to secure the build-up of schools and local infrastructure from criminals and probably war lords.
It's this new world order thing with world wide conflicts and asymmetric threads were we may take part in an international task-force that (hopefully) then will be big enough.
There actually is to be a 35.000 man contingent wich will represent the
intervention forces. Their task would be "peace enforcing meassures" in high intensity conflicts against military opponents. Divided on NRF, EU battlegroups and national contingents. Outfitted with the high end equipment. Making a rather competent force IMO, especially integrated with other european forces.
Then there are
stabilisation and
support forces, wich are bigger, for medium-low intensity conflicts.
It's just believed that we will not need major actuall/conventional warfighting capabilities in the foreseeable future.
integrated, joint and combined are often heared in that context.