Yeah, I remember that idea that neither OTL nor the Axis victory ATL are the "real" history. To me, that kind of blew the wheels off of the wagon of an otherwise good story. Added a weird meta, Matrix-like "this is all an illusion" feel to an otherwise realistic story, which was out of place, imo.
You know, the main reaction to reading this story that I got is that, for better or for worse, I am SO glad that the Cold War we got ended up being between the United States and the Soviet Union. World War II was what really decided the course of human culture for the rest of the century up to today, legitimizing some belief systems and discrediting others.
You can spend days picking apart the problems with both American capitalism and Soviet communism, but I'd pick either of them to live under any day than the worldviews that would've won out in the High Castle world. At least with capitalism and communism both, they have pretensions of internationalism and equality, claiming to work for the benefit of all of mankind regardless of nationality. But Nazism and Japanese imperialism were fundamentally about the fact that their people were the only people on Earth worth a shit, and that the rest of the world was good for nothing other than bowing in humiliation before them. The only difference between them was that the Japanese simply assumed that they were better than everyone else and condescendingly treated others like peons, whereas the Nazis don't even bother to do that; they just wiped out the whole African continent after treating it like a giant fucking chemistry lab.
That, to me, cuts to the heart of why this story has been a successful dystopia for so many years. Can you imagine how humiliating and not-worth-living it would be to live in a world where not only are you treated like a lower level of human for the crime of not being German or Japanese, but on top of that, the world just fought a bloody war that ended with such a train of thought being legitimized and enshrined by those who society considers the most progressive and intelligent among them?
On a more specific note related to this theme, the scenes that always stand out to me, because of my own personal experience, are Childan's interactions with Tagomi and the rest of his Japanese customers. Especially the way that Childan is constantly fretting about properly getting his way through the labyrinthine unspoken rules of Japanese etiquette, and the way in which Tagomi and others get away with psychologically slapping him in the face while simultaneously being as polite as cats about it.
Having lived in Japan myself, I have to say...even in OTL, this is something that happens. I love Japan and its people to death, but even to this day, some of them can be incredibly smug and condescendingly racist, and they often do so in the subtlest, most taciturnly polite way. When I was living there, I got into heated verbal spats on more than one occasion when I called people out on their racist microaggressions.
But that's just it: I live in a world, where, culturally, I have enough pride in myself to not care so much what people think if I don't conform 100% to their byzantine idea of civility, and act differently from the majority. Childan does not: because his culture was conquered, he had a constant idea of self-loathing that really made him feel worthless to the core next to the Japanese overlords. If I were in his position, I would've gotten pissed and blown up at those people minutes into the conversation, but because they had power over him and were writing the cultural rulebook, he had to lie down and take it.
And then I start second-guessing myself: I'm grateful that I'm not put in a position of cultural self-loathing like that, but what about the self-loathing that Japanese and Germans were forced to endure? What about the ways in which Germans had the evils of Nazism rubbed in their wounds, instilling a psychological guilt that continues to this day? What about Japan being demilitarized, occupied, and being called a "nation of children" by MacArthur (and yes, MacArthur's point was more nuanced than those paraphrased words would imply, but still)?
I'm a big believer in the idea that diverse cultures all over the world each have something good to offer. In that regard, capitalism and communism were definitely the lesser of two evils in comparison to Nazism and imperialism. But it's still not 100% great, either.