Loss of territory refers to the situation where a state or nation loses control over a specific area of land or region, often due to war, treaties, or diplomatic negotiations. This concept is crucial in understanding the geopolitical shifts that occurred in Europe during the early 20th century, particularly as nations grappled with the outcomes of World War I and the interwar period. The loss of territory can lead to significant changes in national identity, political power, and economic resources, which were evident in the aftermath of events like the Munich Agreement.