Ostmark should not to be confused with the common term for the former East German currency. The Bayerische Ostmark or more precise Gau Bayerische Ostmark was commonly simply referred to as Ostmark; it included the former Gau Oberfranken und Gau Niederbayern-Oberpfalz. The name Gau Bayerische Ostmark was re-used by the Nazis to describe the three regions of Lower Bavaria, the Upper Palatinate and Upper Franconia under their new administration scheme which, from 1933 onwards, slowly replaced the former administration; the city of Bayreuth was chosen as its main city.
The Nazis had already started to decentralize organizational structures long before the war as they believed that the given structure in form of the various sub-states was simply not flexible enough to ensure complete control, both in peace or wartime. Therefore Germany was divided into numerous smaller areas of administration and control, each called a Gau. The idea behind it was a system based on multiple redundancy: even in cases of regional civil unrest or war-related loss, the remaining Gau areas would remain unaffected and fully operational.
In 1942 the name Gau Bayerische Ostmark was dropped and replaced by Gau Bayreuth. Marks including the term Bayerische Ostmark or simply Ostmark were still frequently used until 1945, a few rare cases show its use until 1950.
One should hold in mind that the idea of dividing Germany into smaller regional groups (which often ignored sub-state borders) as well as the name Gau itself was not invented by the Nazis, it was a organization method and description which had been used by gymnastics and sports clubs ever since the early 19th century.
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