Like, I know, right? It's the kind of thing that makes you look at the macro just to try and make sense of it. Here's what I got:
1) Diesel is vastly more popular in Europe. Popular Mechanics put it at 50% marketshare in 2009. Diesel is cheaper in Europe, too, because the taxes are lower. Diesel engines are more expensive. They require more refinement. Quite okay if you're making the savings at the pump but in the US, you ain't. VW sold 10m cars in 2013, of which 400,000 were sold in the US. Remember - when we're talking American-spec diesel cars, we're talking basically 100k cars a year - literally 1 percent of VW's output.
2) Diesel emissions are measured very differently in Europe. Check out Euro 6 then check out Bin 160 - they're in the weeds for me, but Europe seems to be much more stringent about carbon monoxide but a factor of ten or more less stringent about everything else; Europe doesn't even require particulate emissions be tested while the US limits it to 3mg per mile.
3) If I understand things correctly, Volkswagen basically adhered to the letter of the law in diesel testing, not the spirit. In other words, they probably had a clever lawyer prepare them a background briefing that convinced them that for that 2% of their diesel fleet bound for the US, they were covered from liability for less than the cost of building specialty cars for a market that hated them.
4) As b_b and I have discussed before, the Germans are in an enviable export position right now. The Euro is stupid weak, which makes exports stupid cheap. A 2015 VW Golf is $18k. A 2008 VW GTi - essentially the same car - was $25k. That doesn't cost VW any less, it just gives them a $7k price advantage against anybody else. And aside from one Chevy, one Ford and one Chrysler, every single diesel passenger vehicle for sale in the US is German.
...and I'll bet the American cars meet American emissions standards.
I'll bet it was a calculated risk, just like Chevy and their fatal ignition switches. And I'll bet when Chevy felt the burn from those fatal ignition switches, they raised unholy hellfire with the DOT about those filthy krauts. So on the one hand, oh holy shit. On the other hand, this trade war?