The Reformation had huge political significance in Europe primarily due to the large amount of political power held by the pope. At this time, most of Europe is made up of independently sovereign states with their own kings and queens who held on to absolute monarchical power through their claim that they were placed on the throne by God and had a divine right to rule. These claims were backed up by the pope and the Catholic Church thus giving the Vatican huge sway over these rulers as the pope could threaten the punishment of excommunication or denouncement of their rule should they not agree to his requests.
When Luther nailed his 95 theses to the church door in 1517, this became one of the first challenges to the nearly infinite power held by the Catholic Church. Many rulers who were eager to break with Rome and become more independent supported Luther’s actions and they themselves declared that they would follow Lutheranism or one of the other Protestant denominations. This was especially important in the principalities and duchies that made up the Holy Roman Empire as with enough support, the Protestant rulers could elect a Protestant emperor.
This would lead to a series of revolts and military actions between the various rulers drawing support from the Vatican for the Catholic monarchs and from powerful Protestant rulers for the reformative ones. These disputes were eventually settled in 1555 by the Peace of Augsburg. This treaty between the Catholic Holy Roman Emperor Charles V and the Protestant members of the Schmalkaldic League officially made both Lutheranism and Catholicism legal in the Holy Roman Empire. It rested on the concept of Cuius region, eius religio, or “Whose realm, his religion,” meaning the ruler of each independent, sovereign territory would choose the faith his subjects would follow. Following this, many states throughout Europe would side either with the Catholics or Protestants and often switch back and forth multiple times in a generation as the religion would be changed with the passing of the crown from one monarch to the next.