How does the short story "Babylon Revisited" demonstrate the universal truth of sacrifice?
Here is one definition of sacrifice:
. . . the act of deliberately following a course of action that has a high risk or certainty of suffering, personal loss or death (which could otherwise be avoided), in order to achieve a perceived benefit for self or others.
In "Babylon Revisited," Charlie Wales is clearly a flawed man, but he is also a man who chooses self-sacrifice at significant times in his life. Although he loves his daughter Honoria deeply, Charlie gives up custody of the child, knowing that he cannot care for her and that she will have a stable life in Paris with his wife's sister, Marion Peters, and her husband.
After battling and apparently overcoming his alcoholism, Charlie moves to Prague where he works responsibly and rebuilds the fortune he had lost. He is safe in Prague, living a healthy life far removed from the excesses of his old, decadent life in Paris. His love for Honoria, however, compels him to sacrifice the safety of his new environment in Prague and return to Paris, the place where old memories of his painful past await him. Charlie sacrifices peace, as well, by returning to Paris to regain custody of Honoria. Familiar sights and sounds remind him of the many ways he had destroyed his life; he is haunted by dreams of Helen, his dead wife. Returning to Paris exposes Charlie to great emotional pain and threatens to wreck his sobriety; he knows the dangers to his hard won and tenuous well being, but he goes. He risks all for love of Honoria.
In facing Marion Peters again, Charlie sacrifices his pride in order to regain his daughter. He appears humble before her, making only weak efforts to defend himself against her contempt and disparaging remarks. When Marion decides that she will not return Honoria to him at that time, Charlie accepts her decision. Fighting Marion for custody of his daughter would surely have disrupted Honoria's life and destroyed her security. Charlie chooses instead to leave his daughter behind, for a while longer. He will endure the separation for her benefit. Charlie sacrifices what is most dear to him out of his love for his daughter.
Unfortunately I have to disagree with your question. Of course, any work of literature leaves itself open to a multitude of interpretations and possible themes, but I just don't think we can draw out the theme you have indicated from this great short story. This is because at no stage does Charlie, the protagonist of this piece who is a reformed alcoholic (we are led to believe), ever willingly sacrifice his most prized possession, his daughter. On the contrary, his whole purpose in returning to Paris, the "Babylon" of the title, is to prove to his sister-in-law that he has reformed and he is capable of looking after his daughter. His failure to do so is partly a result of the way that ghosts from his former life continue to haunt him and prevent him, and his sister-in-law, from forgetting what he used to be like. The story ends with Charlie having to accept that he needs to wait a little longer until he can get his daughter back:
He would come back some day; they couldn't make him pay forever. But he wanted his child, and nothing was much good now, beside that face. He wasn't young any more, with a lot of nice thoughts and dreams to have by himself. He was absolutely sure Helen wouldn't have wanted him to be so alone.
Thus this story is so much more about themes such as the possibility of change and transformation than it is about sacrifice. Although you could argue that Charlie does "sacrifice" his daughter at the end, the ending makes clear it is a temporary defeat. He is determined to re-gain her and live with her.