It was just a part of the terms of surrender. The same thing happened with Germany after WW1, although to a much lesser extent. They were only allowed to have X amount of military members and were restricted on what they could make.
Along with that there was a bunch of other restrictions placed on them, and that is one of the reasons many people believe how Adolf Hitler rose to power.
Interesting information, I started to detail and the game gives you information that occurred in the second and part of the first world war, it is quite interesting that topic in question, I did not know that Germany could not have its army, just as well as "self-defense"?
They could have an army, however they had to drastically reduce the size of it. Along with other things like like the amount of money germany had to pay back after the first World war all lead to the eventual outcome that was WW2.
Of course, this is just coming off of the top of my head as it has been a while since I read/researched into it!
If you are even a little more informed than I am, I simply had no interest in the subject of the first or second world war until recently that I started to investigate and I ended up liking the history a lot.