Françoise is referring to the Franco-Prussian War of July 1870 - May 1871. After Bismarck rose to power in Prussia, he put forward a German candidate for the empty throne of Spain. The move was calculated to upset the French, which it did; they declared war, but were beaten by Prussia at the Battle of Sedan, and the Prussians went on to besiege Paris. France's Emperor Napoleon III was forced to surrender, leading to his abdication and the beginning of the Third Republic. The country lost Alsace and Lorraine to Prussia, only winning them back after the First World War.
The disastrous war led in part to the Paris Commune, an uprising which took place shortly before Proust's birth.