The central theme of "A German Requiem" is that the characters described, survivors of World War II and their families, are forgetting their experiences in order to cope. Forgetting is the key concept here. I think the following lines from the start of the third stanza are especially key to understanding what the poem is all about, because of their directness and transparency:
How comforting it is, once or twice a year,
To get together and forget the old times.
The unexpected word "forget" is jarring here. Usually people who shared an experience get together to remember it, but here people are getting together to forget. Thus the central theme of the poem is brought out very clearly by its contrast with what we might have expected to read.
The whole ceremony being described - the widows dressed almost like brides, their journey in the "Widow's Shuttle" to their families' cemetery, the gathering of "boiled shirts" by the graves to hear speeches - is all part of the so-called "ritual [of] oblivion" described in the first stanza. I believe the fourth stanza, the one you're asking about here, is a continuation of the same theme:
The better for the widow, that she should not live in fear of surprise,
The better for the young man, that he should move at liberty between the armchairs,
The better that these bent figures who flutter among the graves
Tending the nightlights and replacing the chrysanthemums
Are not ghosts,
That they shall go home.
The bus is waiting, and on the upper terraces
The workmen are dismantling the houses of the dead.
The mention of the bus again towards the end of this stanza supports the idea of continuity. We're still following the same story, that of the widows and other graveside mourners who gather to validate each other in their forgetting of the events of the war. So the "widow" and "graves" mentioned here in the fourth stanza must be the same widow and graves of the first three stanzas.
Note also that the poem is stating that it's good to forget, better than remembering. Whether this statement is genuine or ironic is probably up for debate: personally I think it sounds sarcastic, and that Fenton doesn't have a very high opinion of these forgetters, but I've also seen readings which interpret the poem as saying that sometimes it's necessary to forget because remembering is so horrendous. But regardless of how much sarcasm is in there, the words of the poem at least are in favour of forgetting. We see this in the quote from the third stanza above ("How comforting it is"), as well as in the first stanza ("you must go on forgetting"), and I think this is also what's going on here in the fourth stanza: the message is 'better to forget'.
Now let's examine the individual lines you're asking about:
The better for the widow, that she should not live in fear of surprise,
The widow puts the horrors of war out of her mind so that they can't come back to haunt her. This is the "surprise" she might fear - such memories unexpectedly cropping up. With all of them committed to oblivion, she no longer has to "live in fear" of that surprise.
The better for the young man, that he should move at liberty between the armchairs,
I believe the "young man" is one too young to remember the war, perhaps the son of one of these widows, perhaps even a child. (It's not clear exactly when the poem - first published in 1980 under the title "Elegy" - is set.) His "liberty" is the liberty of ignorance. It is better for him, the poem argues, not to grow up surrounded by tales of horror, to be able to feel free in his own home rather than weighed down by the awful stories of what happened to his parents and family.
TL;DR: these lines are saying it's better to blank out the horrors of war than to dwell on them.
