From Quora:
Neville Chamberlain's pursuit of appeasement with the Third Reich was no naive undertaking. Chamberlain was no friend of Hitler's, but employed appeasement for a variety of reasons, including popular opinion, British readiness for war, and a lack of realistic alternatives.
Chamberlain was the leader of a democratic government, and was responsible to the will of its citizens. Britain was exhausted after the First World War, and the British public had no appetite for another major war. Neither was Chamberlain, who felt this personally, having lost a cousin to the battlefields of World War I. Chamberlain's policy of appeasement thus resonated with the war-weary British public. Chamberlain's opponents, notably backbencher Winston Churchill, were a fringe minority and seen as hawks by most of the public. Public support for Chamberlain was vindicated when he was greeted by cheering crowds after his return from Germany after negotiating the Munich Agreement.
The British Empire in 1938 was in hardly any shape to wage a major war, not least with Nazi Germany. It was still recovering from the Great Depression of 1929, and unemployment was still rampant. Chamberlain knew this, as during his tenure as Chancellor of the Exchequer, he had worked hard to help the country recover from economic turmoil.
Neither was Britain militarily prepared. Had war broke out in 1938 over the Sudetenland crisis, Britain could only send two ill-equipped divisions to the Continent, to face the might of the Third Reich. Britain and its sole ally France would most likely be quickly defeated and humiliated. It also lacked allies as Roosevelt's USA was in isolationist mode, while Stalin's USSR was not trusted.
Neither was it politically prepared. In 1938, the Empire's dominions such as Canada, Australia, New Zealand and South Africa had made it clear that they would not support Britain in a war over the Sudetenland. As mentioned earlier, this wasn't supported by the British public opinion either. Gambling on a war in defiance to public opinion could cost Chamberlain his political career.
Chamberlain knew too well that his country was in no shape for war, and needed to buy time to prepare Britain should a war break given, given the precarious state of global affairs. Chamberlain invested a lot of money into the modernisation of the Royal Air Force. The RAF would prove decisive in winning the Battle of Britain against the Luftwaffe, halting Hitler's westward conquests in 1940. In contrast to 1938, the Empire's dominions were more resolute, and supported the British war effort.
British public opinion also did not see any necessity in a war with Germany, as it was viewed by many that Hitler's demands for ethnically German territory were legitimate. There is no doubt that the Treaty of Versailles was excessively harsh towards Germany and contradicted the principle of self-determination enshrined by President Woodrow Wilson during the Paris Peace Conference. Chamberlain was also fervently anti-Communist. Nazi Germany was regarded as a bulwark against the influence of Stalin's Soviet Union. In the 1930s, Hitler was not regarded as the demonic figure we know today after World War II and was in fact admired by many, even as far away as China's Generalissimo Chiang Kai-shek.
Had Chamberlain not pursued appeasement, there were hardly any realistic options left. As mentioned earlier, war in 1938 was a huge gamble for Chamberlain, as he lacked the support of public opinion and allies abroad. Even fighting a war itself was not realistic. Czechoslovakia was a landlocked Central European country, beyond the reach of British naval power.
In the end, Hitler defied the Munich Agreement by seizing all of Czechslovakia, and invaded Poland in spite of Britain's mutual assurances to Poland, triggering World War II. With hindsight, one could easily argue that Chamberlain's foreign policy was naive and further emboldened Hitler to pursue his aggressive expansionist foreign policy.