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The decade after WWII ended was a terrible time of Stalinist terror.
At the time, Tereza was ten, and her father was arrested for political reasons.
Sabina, then twenty, was studying at the Academy of Fine Arts.
Her Marxist professor tried to teach her a theory of Socialist art, in which conflict was not between good and evil but good and better. The narrator points out that film worked the same way at the time: only happy endings.
What Sabina despised is that the Communist reality was totally different from this Communist ideal.
The narrator notes that Sabina's reaction to Communist kitsch is similar to what Tereza felt when she was made to march around the swimming pool naked in her dream, singing songs with the others to mask the fact that women were being shot dead around her.
"Tereza's dream reveals the true function of kitsch," says the narrator: "kitsch is a folding screen set up to curtain off death" (6.10.6).