This statement is explaining why the Allies demanded unconditional surrender from the Axis in this war. For example, why didn’t the US agree when the Japanese offered to surrender if only the US would guarantee that the Emperor would not be harmed? According to this statement, it is because of the Treaty of Versailles and appeasement.
After World War I, Germany did not feel that it had truly lost. The German government was not remade by the Allies. The Germans wanted to get revenge for what had happened and they wanted to regain their past power. The Allies in WWII wanted to avoid having this happen again. They did not want any conditions on the surrender. They wanted to be able to completely remake Germany and Japan, turning them into democracies that would not make trouble again. In order to do this, they felt that they needed to force Germany and Japan to surrender unconditionally. This would psychologically ensure that the countries realized they had been beaten. In practical terms, it would allow the Allies to occupy and remake them after the war.