The Law and Polish Complicity in the Holocaust
While "Poland as a nation" is not to blame for the Holocaust, and while there was no official cooperation between Poland and Germany, government institutions as well as individual Poles collaborated with the Nazis (see also here):
As German forces implemented the killing, they drew upon some Polish agencies, such as Polish police forces and railroad personnel, in the guarding of ghettos and the deportation of Jews to the killing centers. Individual Poles often helped in the identification, denunciation, and hunting down of Jews in hiding, often profiting from the associated blackmail, and actively participated in the plunder of Jewish property.
Poland has a long and strong history of antisemitism. Before WWII, the "Jewish Question" was an important political topic and there were calls to deport all Jews. Currently, Poland has among the highest rates of antisemites in Europe (about a third of the population according to PEW, and an index of 45% according to the ADL). And before, during, and after WWII, Poles carried out pogroms against Jews.
Those that oppose the new law fear that it will suppress legitimate criticism of Polish actions and antisemitism during the war. They see it as an attempt to whitewash history.
It is difficult to say whether or not the law will be applied that way (my guess is that it probably will not), but the relevant part is that it leaves the impression of rejecting legitimate criticism about Polish involvement in the Holocaust. As the World Holocaust Remembrance Center said:
restrictions on statements by scholars and others regarding the Polish people's direct or indirect complicity with the crimes committed on their land during the Holocaust are a serious distortion.
Context and rising Polish Nationalism
A lot of the worry is not about the exact content of the law itself though, but the context around it, specifically increasing nationalism stoked by the right wing Law and Justice party. As the Guardian says:
Many observers believe the party has reignited the debate on the Holocaust as a deliberate ploy to further fuel nationalist sentiment among its voters.
The Atlantic shares this view:
But this law isn’t about the finer points of history. It is aimed at shoring up the right-wing base of the governing Law and Justice party
Another criticism, mainly from the US, is that the law restricts free speech (see eg CNN link above).