The idea is that if the US had not entered the war, then the UK and the continental powers would have worn themselves out (they were already pretty worn out by the time we joined) and have sued for peace (armistice) and hammered out an agreement. It wouldn't have been ended up being lop-sided, because there would have been no winner(s) dictating terms -- just a bunch of tired people agreeing to quit and not fight again. Who knows if this is true or not, but the Treaty of Versaille was negotiated between clear winners and clear losers - which was enabled by the US joining the war late on one side.
The confusing part is, if the war was ended indecisively then how is that going to prevent future wars? Brush fire wars plagued Europe for centuries until WWII came about and everybody realized that war was too dangerous to toy with anymore.
The people might have been different, but I don't see how an indecisive WWI prevents another border skirmish from getting out of hand 20 years later. Maybe it would have been better for the Jews, but even that's iffy given the generally hostile attitudes of continental Europeans to Jews and Gypsies.
Counter-factual hypotheticals are tough. I think it intriguing to consider that the US staying out would have prevented the rise of the Nazis and Soviets, but I'm not in a position to run the experiment.
