Germany had very strict blue laws the entire time I lived there. All stores closed at 6 pm weekday, 2:00 pm on Saturday and all day Sunday. The first Saturday of the month (lange Samstag), the stores stayed open until 6 pm. In the beginning, I thought it was peculiar and inconvenient, but I adjusted and liked it.
AFAIK there was no religious connection. It was strictly for the reason you state, Pete - ensure that folks have evenings and weekends off with their families. I think it has loosened up quite a bit since I left in 1986, for better or worse.
Here some more info on how it has progressed since:
http://www.german-way.com/shophrs.html