Understatement is most often a form of sarcasm, in modern usage, usually with some hyperbole stated or implied.
Its original meaning was, literally, to undervalue or underestimate something, verbally or in writing.
Grammatical use of understatement
Actual understatement, in the sense of under valuation or underestimation of a fact, is the purely grammatical sense of the word. It refers to an actual inaccuracy in the statement.
Note:Understatement can also refer to poor usage, where descriptors are inadequate, and lacking in basic information. This form is the literal version, where understatement is describing the statement itself.
Examples of grammatical understatement
Describing a canary: 'It's a bit yellow.'
Describing Beethoven's Ninth: 'There is some music by Beethoven in his Ninth Symphony.'
Describing the Sahara Desert: 'The desert is sometimes sandy and dry.'
Describing cost of a new car: 'It should only cost $100.'
Modern usage of understatement
Understatement is currently used as a severe contrast between description and reality. The intention of the usage can be derogatory, complimentary, or purely sarcastic.
Context is the main defining value of understatements:
Simple forms of understatement:
First person: 'It's just an old Yves St. Laurent shirt.'
Third person: 'The 6 metre floods are really just a practical form of rising damp.'
Situational: 'It's only 500km to the nearest water.'
Complimentary: 'You're looking well.'
Derogatory: 'That luminous tie obviously came from a Trappist monastery.'
Elaborate forms of understatement are usually compound, involving multiple metaphors in the context of the subject. The usage gives a progressive series of understatements.
Elaborate forms of understatement
Personal: 'I'm thinking of saving my wages and putting a down payment on a lentil, one day.'
Third person: The sales manager was without a doubt the most non-materialistic person I have ever met.
Situational: 'Historical analysis and speculation by experts over decades now suggests that World War Two may have been in some obscure way unpleasant and noisy for the actual participants.'
Understatement as a metaphor
In more advanced writing, understatement is used as a metaphor for concepts rather than physical facts.
In Herodotus, a Spartan king views the booty from a captured Persian camp, and says in effect: 'Did they come here to rob us of our poverty?' This is understatement in terms of the relative wealth of the Greeks and the Persians.
Unless grammatically incorrect, understatement is always used in a context in which the expression is intended to