One of the most important episodes in Ishiguro's novel involves the 1923 convention at Lord Darlington's house to potentially effect a renegotiation of the Treaty of Versailles. Lord Darlington, in particular, is unhappy with the outcome of the treaty, which he feels unfairly penalizes Germany. Here is some background on the Treaty which ended World War I that will help you make sense of much of the political discussion in the book.
The Treaty of Versailles was signed on June 28, 1919, five years after the start of the first great World War and after six months of negotiation at the Paris Peace Conference. The biggest issue at stake in the negotiation of the treaty was how much to penalize Germany for causing the war - a discussion which ultimately ended with a full blame of the country for precipitating conflict and imposing on them a harsh set of reparations and penalties which ultimately came to build German resentment towards the Allies and pave the way towards the second World War.
The terms of the treaty were quite severe for Germany. These included:
The terms of the Treaty, which Germany had no choice but to accept, were announced on May 7, 1919. Germany lost:
-- more than 13% of its country's territory
-- its African colonies, which included Cameroon, Togo, and East Africa
-- Alsace-Lorraine, ceded to France
-- Upper Silesia, ceded to Poland
-- the right to Germany as a military zone
Additionally, German armed forces were limited to 100,000 troops, the manufacturing of weapons and import and export of weapons were prohibited, as was the manufacture of gas or the use of tanks. Military equipment was also heavily limited - including naval ships, submarines, military aircraft and artillery. Finally, and perhaps most humiliating, were the articles attached to the Treaty. In these articles, Germany was forced to accept sole responsibility of war in the "War Guilt Clause" and vow to somehow compensate the allies. The German emperor, Wilhelm II, was declared a war criminal. And last but not least, the Germans were forced to pay huge reparations to the Allied Countries.
Overall, the Treaty of Versailles had a devastating effect on the German people. Not only did it cause a source of shame for them around the world, but it crippled them economically. Moreover, the German public didn't support the treaty - believing that they had neither fully caused the war nor lost it it ultimately. Even within Germany, the signing of the treaty created deep factions between German nationalists who believed the country must never give in to such draconian terms and 'extraloyal' Germans, like Poles, and Jews who had another affiliation beyond their country. Ultimately, these civil conflicts between groups hardlined into the formation of the German nationalist Nazi Party that quickly escalated into the start of the second World War.