Final answer:
The term 'piazza' describes the large or principal courtyard of an Italian palazzo, differentiating it from an atrium or a peristyle, which have other architectural definitions.
Step-by-step explanation:
The term used to describe a large or principal courtyard of an Italian palazzo is a piazza. While the term atrium describes a square hall lit by daylight from above, and peristyle refers to a columned space surrounding a courtyard, these are not the principal exteriors of an Italian palazzo. A loggia refers to a covered exterior gallery or corridor, and a portico is a porch leading to the entrance of a building, particularly a columned entrance. However, when describing the expansive, open public space or courtyard associated with a palazzo, 'piazza' is the correct term.