@camlok,
I think you are deceiving yourself. This was a big defeat.
Hillary Clinton was running against Donald Trump. This is a man with the lowest approval rating of any winning candidate... many people who voted for him didn't like him. Even considering the fact that Hillary won the popular vote; Hillary only got 48% of the vote (to Trump's 46%) running against Donald Trump. She lost to Donald Trump.
There is no excuse here. She lost an election where most Americans didn't like either candidate... she is basically as popular as Donald Trump.
If the Democratic party wants to fix what is wrong (given that they are losing elections at every level of government) they are going to have to stop deceiving themselves.
If you don't win elections, nothing else matters.