So as a member of the LDS church, I've participated in what we call baptisms for the dead. As you probably know, there's been a bit of controversy surrounding these lately, so I'll take this opportunity to explain them and my experiences with them.
So what is baptism for the dead? As the Bible states, we believe one needs to be baptized in order to return to live in our Heavenly Father's kingdom (John 3:5). Now what does this mean for those who have passed on without the opportunity to be baptized? It's obvious that baptism was intended as an essential rite for salvation. Well, the Bible also alludes to baptisms for the dead (see 1 Corinthians 15:29), and this can be seen as the solution to this problem. We believe that with the restoration of the fullness of the Gospel of Jesus Christ through the prophet Joseph Smith this one ordinance that the early Christians had that was brought back into use.
That sounds creepy, how is it done? Essentially, you do perform a baptism using a living person, except the wording in the ordinance is changed to reflect you're baptizing the living person on behalf of the deceased. Nothing creepy.
So does this mean everyone who you do this for is converted to the LDS faith? No. We believe that the deceased has the opportunity to accept or reject any ordinance performed for them.
So why was this being done for Holocaust victims? Well, usually members of the LDS faith submit names of deceased relatives so this ordinance can be performed for them. I can understand why someone having studied the horrors Holocaust would think "well that sucks, who's going to get this ordinance performed for all these people who died without ever having families? They have no posterity that might end up converting to do it for them," and then deciding to submit the names for them. I don't know enough about the issue to know who was involved, but I'm sure it was done with good intent. It's also been preached that eventually everyone will get the chance to accept or reject the Gospel, so that's why names of some famous people have been submitted and done, someone out there being overzealous. Whenever I went, it's been the names of people I've never heard before, no one famous, submitted by a member who has trouble making it to the temple often enough to do work for their all of their ancestors they've found. In the case of the Holocaust victims, recently the Church has been making an active effort to stop members from doing things like this. The members responsible in this latest round bent over backwards to do it (in order to get past the barriers against it they would have had to) and faced some sort of disciplinary action. What kind it was wasn't revealed, but the Church is fighting abuse of this system.
At this point, I'm going to take the liberty to explain what it's been like growing up as an LDS youth going to the temple to do them. First you had to get a recommend to go inside the temple to do them. All that entails is speaking with ecclesiastical leaders to ensure that you're keeping the standards you promised to keep at baptism. When we did them as youth, we were the living person who was baptized for the deceased. Priesthood leaders with the proper authority to perform the baptisms came along to baptize us.
Looking back, I'm grateful for the opportunity I had to do them because I've had spiritual experiences while participating in them. I remember when I was a very young teenager after we finished, one of those leaders told us about an experience he had. He told us about a letter he got from a friend of his dead son. The person who wrote the letter related a dream she had where she spoke with this son after his death. In the dream, she asked "how do I know this is real?" or something to that effect. And then he showed her a part of his arm that was covered by his shirt during the viewing. It showed evidence of some kind of past injury. This man explained that there was no way his son's friend could have known about that because he was one of the few people who had seen that injury. Now I don't go off of the faith of others, but that man was a family friend, and it was one of those things, like my Dad's testimony, that gave me the desire to find out for myself if there really was a God, if there was something more to this life than what we see, if Jesus Christ really did die for me my sins and if He called a prophet to bring his Gospel back in these times.
Interestingly enough, I had the opportunity to participate in this ordinance this past week. Except this time around, I had the priesthood authority to be the one doing the baptizing and they needed me to do it. This was a really cool experience for me because I felt something while I was doing it. And it was a reminder to me of who I am as a son of my Heavenly Father and a bearer of the priesthood. Sometimes I forget I had been given that priesthood that was restored because I'm so busy with the things that I do. Sometimes this world is so busy that you forget about the things that are most important but when you do the right thing, you're reminded of them. I'm grateful for Jesus Christ and his Atonement for mankind. I'm grateful for the priesthood. I'm grateful for my Heavenly Father and the Gospel.
EDIT: I'm currently asking the family friend for more clarification, so there might be a detail fix or two coming up.