It's a common noun describing the period between two wars, usually referring to the period between World War I and World War II.
Here's why it's not capitalized:
* It's not a proper noun. It doesn't refer to a specific person, place, or thing.
* It's not a formal title. It's a descriptive term.
You would only capitalize "Interwar" if it was part of a specific title, like "The Interwar Period" or "Interwar Literature."