Why was the Peace of Augsburg considered a religious compromise?

The Peace of Augsburg is considered a religious compromise primarily because it recognized a permanent religious division within the Holy Roman Empire. This agreement, concluded in 1555, acknowledged the coexistence of Lutheranism and Catholicism, allowing the princes of the empire to determine the religion of their own territories. This approach fostered a degree of stability by providing a legal framework for both faiths to exist side by side, alleviating the immediate conflicts that had arisen during the Reformation.

In contrast to a complete enforcement of one doctrine across all states, as some other options suggest, the Peace did not impose uniformity in religious practice; instead, it respected the diversity of beliefs within the empire. While it did put an end to certain religious hostilities, it did not eliminate the potential for future conflicts entirely, nor did it remove the requirement for religious practice altogether. Thus, the agreement's capacity to delineate boundaries between the two major religious factions and to allow for the autonomy of various states in choosing their faith is what renders it a significant and pragmatic religious compromise in the context of the Reformation.