Through the Early Modern Era there was a long established tradition of tribute being paid by the losing side in a war. As wars became larger, longer, and more devastating through the 19th Century, so the tribute gradually became re-imagined as reparations for the costs of the war won by the victor.
However, to make a long story short, The terms of the TrayTreaty of Versailles were so harsh on Germany because the French and Prussian/German governments had been one-upping each other in war reparation demands since 1807, through 1815, 1871, and finally 1919.