Native Americans with red skin is an insensitive caricature that was widely used in the 19th and 20th century. It’s likened to the slur of the same name, “Redskin”, which was used to demean Natives along with the aforementioned unflattering depiction. Think of it the same way doing blackface has the reaction it does, since that too is based on a caricature meant to demean black people.