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World War I was known as the "Great War" not because it was wonderful but because it was big. This is the sense of "great" that is being used here.
WWI was big in part because more countries were involved in it than in the typical war of the past. WWI involved countries as far flung as the Ottoman Empire, the United States, and Australia. In addition, WWI was "great" because of the scale of the fighting. This was the first truly modern war requiring huge armies with millions of men fighting. Finally, this was a relatively long war. The combination of all of these things made this war seem "great" in comparison to wars that had come in the recent past.
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