Understatement
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Understatement is a form of speech where a lesser expression is used than what would be expected; a commonly cited example is "The Rocky Mountains are scenic." This is not to be confused with euphemism, where a 'polite' word replaces a vulgar word, or a word with harsher meaning.
Understatement is a staple of British humor. For example, in Monty Python's The Meaning of Life, a suburban dinner party is invaded by Death, who wears a long black cloak and carries a scythe. He is the Grim Reaper; the party is over; the guests must all go with him. "Well," says one party guest, "that's cast rather a gloom over the evening, hasn't it?"
In another scene from the same movie, an Army officer has just lost his leg. Asked how he feels, he looks down at his bloody stump and says, "Stings a bit."
For a literary form see litotes.
The opposite is overstatement, or hyperbole