Par is the result on a hand if both sides have done as well as possible. In other words, a par contract has been reached when neither side can improve their score by bidding again. This assumes each player takes the best possible line given the actual lie of the cards.

On this hand East opens 1♦  (rule of 20), South's 2♦  call is a 'Michaels Cue Bid' showing 5-5 in the Majors.

If West bids 4♦ then it is easy for North to bid 4♥ .

Now East hasn't got much better than an average opening hand so can't be sure if 5♦ will make but it is still the right bid. Assuming 4♥ makes then -100 for 1-off in 5♦ (or -200 for 1 off doubled) will still be a better score than -420 if N-S make 4♥ .

South bids 5♥ using the same thought process with even 5♥ doubled -3 being a better score at -500 (not vulnerable) than allowing E-W to make 5♦  for -600 (vulnerable). Note that the vulnerability is a key factor in South's decision to sacrifice.

After 5♥ if E-W bid again they will turn an (albeit small) expected positive score for defeating 5♥ into an expected negative score for going down in 6♦ .

Par on this hand is 5♥ X - 1.

This may seem complicated but it is a good illustration of how you should be thinking when deciding how far to compete

Note that if E-W play the Losing Trick Coint then with LTC = 6 opposite an assumed LTC = 7 West does much better to bid 5♦ immediately putting pressure on N-S and making it harder for them to decide whether to sacrifice in 5♥ .