Pyrrhic defeat theory means that sometimes it is better to lose a battle than to win it. It comes from an Ancient Greek soldier named Pyrrhus who won a battle against Rome but he had to sacrifice lots of his own soldiers in order to do it. So even though he won, he was sad because it was too costly.
So the theory is that sometimes it is better to lose a battle because even if you do win, the cost may be too much and the victory might not be worth it.