She made a small gesture with her free hand. Its arc took in a lost world of air raids and hurried meals in crowded restaurants, hotels, railway stations, khaki, sunlight, stolen pools of peace in chaos.
I guess it is about the era of WW2 but can't exactly understand the description.
The speaker, Meg, is talking about bygone days with her late husband and their dog. Her "small gesture", like many hand gestures, has a meaning, albeit a vague one. The purpose of this gesture is to avoid her having to explicitly describe that "lost world" of air raids and so on. Instead of going into detail about all her experiences, she makes a "small gesture" which is intended to encapsulate all of it. The movement itself, of course, does not describe anything, except in the context it's made, but the "arc" of her hand is the gesture, so on some level, that simple arc is the replacement for a detailed description of that whole "lost world" from the past.
As for what the lost world is: as you guessed, it is about the era of WW2. The mention of "air raids" and "khaki" (the colour worn by British military men) makes this clear. Probably the "hurried meals" and "stolen pools of peace" refer to the short periods that Meg and her late husband were able to spend together during his military leave. The "chaos" of the war surrounded them, but for some moments in "crowded restaurants, hotels, railway stations", they were able to enjoy time together before he went off again, ultimately to die.
