The destruction of the windmill that the animals have worked so hard and suffered so much to put up occurs in Chapter 8 of this great novel. The men are successful in blowing up the windmill, but then the animals turn on them viciously and force them to flee. However, although they are "victorious" it is clear that this is a hollow victory at best:
They had won, but they were weary and bleeding. Slowly they began to limp back towards the farm. The sight of their dead comrades stretched upon the grass moved some of them to tears. And for a little while they halted in sorrowful silence at the place where the windmill had once stood. Yes, it was gone, almost the last trace of their labour was gone! Even the foundations were partially destroyed. And in rebuilding it they could not this time, as before, make use of the fallen stones... It was though the windmill had never been.
In spite of Squealer's cheery optimism and characteristic warping of the truth, the animals recognise that the destruction of the windmill symbolises the end of Animal Farm as they know it. Interestingly, earlier on in the novel, the windmill symbolised the desires of Snowball and the progress and prosperity of the Farm, but now its destruction indicates how impossible Snowball's desires now are. Therefore the battle of the windmill represents a crushing defeat in so many ways for the animals.