Why are the Nazi's (and by association Hitler) thought of as a military juggernaut. Why does the general public think Hitler was one misstep away from world domination? I could kinda get the second misconception, about Nazi world domination. That can be attributed to Allied propaganda. However Nazi 'military superiority' is mainly a by product of luck. Why do people glorify Nazi military conquests?
I don't know if it would be accurate to suggest that the Nazis' military superiority was a product of luck. There will certainly be someone more suited than I to speak to the military efficiency of something like Blitzkrieg, but I can address your question of why Germany would have been perceived as a superior military force in the 1930s and throughout some of the war.
The "national socialism" from which the Nazis derived their name was geared towards crafting German society into an efficient military machine. Industry was nationalized, make-work projects were focused on building military infrastructure, and national social programs such as the Hitler Youth were designed to indoctrinate the German populace with ideals which were militaristic to their core.
The concept of lebensraum (or "living space") elaborated by Hitler in Mein Kampf indicated that, if Germany was to recapture its glory, it must expand into its "rightful" territory in Czechoslovakia, Austria, and Poland. In order to ensure the success of this expansionist policy, the Nazi leadership built a German military machine which could ensure a balance of power and intimidation which would allow the German state to expand. It worked, as evidenced by the non-interventionist "appeasement" policy of Neville Chamberlain and the rest of Europe's governments. The German army was feared for its potential.
I can't speak as well to their performance in the war, but hopefully this addresses something of why they held a reputation for military efficiency and superiority at least until 1939.