Bedrock is having a mayoral election. One of the candidates is a violent war mongering asshole that riles people up against the lizard people. This reminds Fred and Barney of their time in the army.
Back then the father of said violent candidate was riling people up against the “tree people”. Fred, Barney, and other soldiers fought what they believed to be a defensive measure against the tree people. Turns out, it was actually an invasion, in order to kill off the tree people and take over their forest to build Bedrock.
That’s what Fred means when he says he and Barney participated in a genocide. They literally did.
(Extra fun fact, Barney adopted a tree person baby after the war, and his son Bamm-Bamm is the last tree person.)