Yeah, you are missing the backstory for that, which another commenter mentioned. Bolivia violated a treaty they had with Chile, and also had a secret alliance with Peru. They violated the treaty so they would go to war with Chile, and then team with Peru and try to conquer Chile. However, Chile had a very recently professionalized army and navy trained by the Germans, whereas Bolivia and Peru had peasants conscripted. (To this day the Chilean armed forces are amongst the most trained in the world.)

The result? Bolivia lost all of its coastline, and Peru also lost its southern territories.

You can summarize the war as in Bolivia and Peru fcked around, and then found out.