they explicitly state that "Applications from scholars located outside of Germany are welcomed
By all means go for it, it can't hurt to apply, but I think 'outside of Germany' in practice means elsewhere in the EU. Each EU state has a legal duty to treat all EU applicants equally, i.e. all things being equal it would be unlawful to favor a German applicant over a French applicant. That's how I would read the welcome to 'outsiders'. You mention the serious braindrain problem - think also of the serious unemployment problems. Very high unemployment (apparently now at its highest since reunification) doesn't usually translate into a 'foreigners welcome' climate. Although in the end it's still worth going for it - trying is never a waste of time and you just never know.