Wikipedia
In terminology of Nazi Germany, Volksdeutsche were "Germans in terms of people or race", regardless of citizenship. The term is the nominalised plural of volksdeutsch, with Volksdeutsche denoting a singular female, and Volksdeutsche(r), a singular male. The words Volk and völkisch conveyed the meanings of "folk" and "race" while adding the sense of superior civilisation and blood. These terms were used by Nazis to define people in terms of their ethnicity rather than citizenship and thus included Germans living beyond the borders of the Reich, as long as they were not of Jewish origin. This is in contrast to Imperial Germans (Reichsdeutsche), German citizens living within Germany. The term also contrasts with the usage of the term Auslandsdeutsche (Germans abroad/German expatriate) since 1936, which generally denotes German citizens residing in other countries. The difference between 'Imperial German' and 'Ethnic German' was that those designated as being ethnic Germans did not have paperwork to prove their legal citizenship to work or vote within the country though some were from either Germany or lost territories of Germany taken during and after the First World War.
Volksdeutsche were further divided into racial groups—a minority within a minority in a state—with a special cultural, social and historic development as described by Nazis.