Brief Answer:
Read below.

Detailed Answer:
I read your question carefully and I understand your concern.

I suppose that definition is part of a MRI report. It means that there is shrinking of the brain so to say and that that shrinking is diffuse, not affecting one brain lobe more than the others.

Its interpretation depends on the context of the patient. All of us without exception start to lose brain cells after our twenties. Initially it is not perceptible on MRI but over the years these losses accumulate and as we get older this volume loss is more visible. So it is part of aging and it should be interpreted based on the age of the patient. It would be worrying in a 20 year old but to a degree it is to be expected in someone over 70 years old. It may be associated with some memory loss but not necessarily, plenty of people have volume loss on MRI without having any memory complaints.

So as a neurologist when I request a MRI in an elderly patient complaining of memory loss, I request it to exclude certain conditions like tumors or stroke and to see if there is volume loss in certain areas typical for certain types of dementia (say in Alzheimer's there is pronounced volume loss in the temporal lobes).
Otherwise I do expect some volume loss in a 78 year old patient and it does not affect my evaluation, the rest of the evaluation depends on the interview and findings on physical exam.

I hope to have been understandable. I remain at your disposal for other questions.

---