Public vs. private: that's the issue. If you can't get your head around that, I can't help you.
People can have all the PRIVATE displays they want, even those displayed for the public. That's free speech.
PUBLIC displays funded by PUBLIC money must be for the whole public. That means everyone or no one. That's non-establishment of religion, which is in the First so that people can continue to enjoy the PRIVATE practice of their religion, no matter what it is.