It proved that the League was completely powerless if a strong nation decided to persue an agressive policy and invade neighbouring countries. This undermined the League and made it look weak, especially as it confirmed what mnay critics had always said.
It further undermined the League that Japan was a permanent member of the League, yet it was completely disregarding its rules and values, making the League look weak and foolish.
It proved that the League's sanctions were completely ineffective.
It showed that Britain and France were not prepared to use the necessary force to support the League.
Hitler and Mussolini, the two European faschist dictators watched the failure of the League and Britain and France, and realised that they could also get away with aggression, as they did in the followinf few years.
Japan didn't leave Manchuria, and in fact in 1937, it invaded China, which it held until the end of the war.
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