This is because 'to hit' can of course mean "to punch someone" in English, and then 'ler' is the present tense of the Norwegian word for "to laugh". Put these words together and it made some amount of sense to me to imagine old "hit-laughs" as someone who hits people and then laughs at their pain, in other words a bully, a sadist, or otherwise a cruel villain.
His dad was born a Schicklgruber but changed his surname at age 39, apparently.
Also the only reason it's spelled like that is becuase of inconsistent 19th century German spelling, it probably should have been 'Hiedler' or even 'Huttler'