At the beginning of 1918, Germany looked on the up somewhat. They'd pasted Russia with the Treaty of Brest-litovsk and held their ground in the West. The reversal of fortune came quite suddenly relatively speaking. No wonder the stab in the myth about the successful German military being betrayed by the politicians gained traction.
The other part of it was that when the war ended in November 1918, the front line was still entirely in Belgium and France (barring a tiny sliver of Germany near the Swiss border). Stab-in-the-back proponents were able to point out that Germany had "surrendered" (even though it was initially presented only as a ceasefire) without the Allies occupying any part of Germany during the fighting.
It was a reason why the Instrument of Unconditional Surrender at the end of the sequel was signed by the military commanders, so noone could allege they were sold out.
Well, this, plus the fact that >90% of Germany was occupied by Allied and Soviet forces in May 1945 - apart from Norway, Denmark and bits of the Netherlands, Czechoslovakia, Germany and Yugoslavia the Reich just didn't exist.
Incidentally, it's worth noting that Germany was really the only Axis country which surrendered unconditionally, despite this being an Allied requirement from the Casablanca conference - both Italy and Japan were able to surrender with conditions.
The great irony about German bitterness over the territorial losses was both that the Treaty of Brest-Litovsk was harsher than Versaille and that German irredentism in the 30s and 40s ultimately led to Germany getting an even harsher round of territorial losses through Potsdam. If Germany ever tried it again, all that would be left would be Dusseldorf.
Agreed. I understand that Germany's harsh conditions in the Brest-Litovsk treaty was partly to maximise the amount of grain the Central Powers could extract from former Russian territory to feed starving citizens back home. However it's also worth considering that the peace conditions the German government was considering for France were almost as extreme.
In this context it's worth going back to the period leading up to World War One: there was a view among a lot of British liberals that war between nations was pretty much impossible given the value of international trade - war would be an economic disaster, with the victors almost as economically ruined as the losers, and thus no rational leader could possibly want it. In a way it could be seen as a pre-WW1 version of Mutually Assured Destruction, the concept which seems to have helped keep the peace during the Cold War.
However, what seems to have been missed by the liberals was that many in the German government seem to have been completely unconcerned by this possibility. Instead, the German view seems to have been that if they went to war and won, then all of Europe would be available to pay for German (and Austrian) reconstruction; that would be an economic disaster for the rest of Europe but simply the Darwinian price the losers would have to pay.
If my view is correct (and I have no idea whether historians think this) then I suspect that hypothetical German occupation of Europe following their hypothetical victory in WW1 would have been very similar to actual German occupation of Europe following Germany's actual victories in the early part of WW2. (One obvious difference would have been the treatment of Jews. This in turn leads to a number of dark places, such as how Jews would have been viewed and treated by disgruntled Britons and French.)