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I notice that history books dealing with pre-WW2 times frequently refer to the place where diplomats are to be found as a legation, but nowadays everyone calls this building an embassy.

Is there any particular reason for this change?

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From Wikipedia

A legation was the term used in diplomacy to denote a diplomatic representative office lower than an embassy. The distinction between a legation and embassy was dropped following World War II. All diplomatic representative offices are now designated as embassies or high commissions.

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Thank you, @souljacker. –  Brian Hooper Apr 5 '11 at 11:40
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Until World War II, only great powers exchanged ambassadors and had embassies in each other's capitals. During the war, small-state Allies with legations in London and Washington elevated their status to embassy. Gradually, all legations became embassies -- except diplomatic missions exchanged by members of the British Commonwealth, which used the term high commission.

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The Commonwealth exception is because historically the British monarch was also the head of state of the Commonwealth realms (this is now the case for some, not all). An ambassador goes between heads of state, and it makes no sense for the Queen to send herself an ambassador. –  Optimal Cynic Oct 24 '11 at 5:25
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