A more thorough explanation:

Indemnity land refers to public land that is granted to a railroad company to help cover the cost of constructing a right-of-way. This land is given to indemnify the railroad company for land that was previously granted but has since become unavailable for railroad use due to a disposition or reservation made after the original grant.

For example, if a railroad company was granted land for a right-of-way, but later a portion of that land was taken away for a national park, the railroad company may be granted indemnity land to make up for the lost land.

Indemnity land can also refer to federally owned land that is granted to a state to replace previously granted land that has become unavailable for the state's use. This is also known as place land.

For instance, if a state was granted land for a park, but later that land was needed for a military base, the state may be granted indemnity land to make up for the lost land.