Why is the Peace of Westphalia 1648 regarded as a landmark in European diplomatic history?

Because it ended by diplomatic means two very long-running wars: the Eighty Years' War between Spain and the Dutch Republic, wich gave the Dutch Republic its independence from Spain; and the devastating Thirty Years' War between the Protestant and Catholic countries within the Holy Roman Empire, a war that had also drawn a lot of outside parties into the conflict.

All in all, the Peace of Westphalia ended war conditions between the Holy Roman Emperor Ferdinand III of Habsburg, the Kingdom of Spain, the Kingdom of France, the Swedish Empire, the Dutch Republic, and a great number of Principalities and city-states within the Holy Roman Empire.