"The Sniper," by Liam O'Flaherty is historically relevant because he was writing about very real occurrences in Ireland during the Irish Civil War, where fighting took place between the Republicans and Free Staters—when families were divided and innocent people were literally "caught in the cross-fire."
Historically, the war in Ireland had been raging in one form or another for hundreds of years. In the twelfth century, an English "king" had declared Ireland to be property of the British and over the several centuries, colonization by the English took place in Ireland. Ireland's native inhabitants were not happy about this. The northern part of Ireland was predominantly Protestant, while the southern part of Ireland was predominantly Catholic. Because so many people had settled in northern Ireland, and major businesses as well, it was impossible—as time went on—to allow Ireland to become an independent nation. And while things have changed—the battles are no longer raging in the streets and the form of government has changed—there are still some tensions remaining there.
Before the Civil War in Ireland, in 1922, "twenty-three of Ireland's thirty-two counties were [declared] Irish Free States." The Anglo-Irish Treaty had been signed to bring peace, but not everyone in Ireland was in agreement with adoption of the treaty. The "Free Staters" supported the treaty, while the Republicans (connected to the IRA, the Irish Republican Army) did not.
The story of "The Sniper" tells of the cruel realities of the Irish Civil War, where innocents were killed and families were divided, father against son and brother against brother—very similar to the American Civil War. In the story, the sniper—the main character—is a member of the Republican forces, and his brother, the other sniper, is a Free Stater.
This is the historical relevance of the short story, helping the reader to understand why citizens of Ireland were at war with each other.