1. / Italy (though allied with Germany) decides to backstab it by joining the "allies" / and finally the Americans stomp there way in to seal Germany's fate.
2. New technology and a massive arms build up that gave nations an itchy trigger finger.
3. The notion that wars were often fought, won, and lost quickly and without significant bloodshed.

There are a lot of other, more complex reasons, but these are really the big ones.  Basically, everyone thought they could win quickly and everyone had a lot of big friends to bring to the party.  In the end, there was a whole lot of dying, the re-working of Europe's map, and a bitterness that let to World War I part 2 about 20 years later.

The causes of World War I all came to a head with the Assassination of Archduke Franz Ferdinand, and his wife Sofia in Sarajevo in August 1914.  This single event set in motion a chain of events that eventually drew the entire continent of Europe into war.  Archduke Ferdinand, the heir to the Austro-Hungarian throne, was assassinated by Serb nationalists.  Serbia had only recently gained independence from Austria, and had sought assistance from Russia in that endeavour.  Russia had initially promised to back Serbia but then reneged on the deal.  Czar Nicholas II had resolved never to do that to his Slavic brothers again. 

In the aftermath of the assassination, Austria made a series of demands that interfered with Serbian sovereignty.  With a firm commitment of backing from Russia, Serbia rejected Austria's demands.  Austria mobilized to invade Serbia and Russia mobilized to counter the invasion.  Austria had an alliance with Germany.  When Russia mobilized against Austria, Germany mobilized to counter Russia.  When neither side backed down, Germany invaded Russia.  Russia had a military alliance with France, so the invasion of Russia brought France into the war against Germany. 

Germany achieved success early, it made a solid gain into Russia, and prevented Russia from invading Austria, allowing Austria to invade Serbia unimpeded.  Germany then switched its Eastern campaign to a holding plan, and turned the majority of its forces against France.  Instead of meeting the French head-on though, Germany went for an end-run around their Northern flank.  This strategy required Germany to violate Belgian neutrality.  Great Britain had a military alliance with Belgium so the violation of neutrality drew Great Britain into the war. 

The Ottoman Empire (Turkey) wisely sought to remain neutral, but Turkish control of the Dardanelles and Bosporus straits meant they had to take sides.  If they maintained a long tradition of closing the straits to military traffic, they would inevitably assist Germany and Austria, because the Russian Black Sea fleet would not be able to back up the French in the Mediterranean, forcing Britain to divert a portion of its Navy to the Mediterranean.  Opening the straits to military traffic would have the opposite effect.  Britain confiscated 2 paid-for destroyers from the Turks at the start of the war, and that pushed Turkey towards Germany and Austria.  Fearing that the straits would remain closed, a British Cruiser and minesweeper were dispatched to force the straits open.  The Cruiser was forced to retreat, and the minesweeper was sunk across the Dardanelles, and that sealed Turkey siding with Germany and Austria. 

A US diplomat had compared the situation to a powder keg, "All it takes is a spark to set it off."  It proved an apt description. 

There were very many causes of World War I.  There was one immediate cause of the war, but a multitude of more fundamental causes that were more distant in time from the outbreak of the war.

The immediate cause of the war was the Serbian rejection of Austria’s unreasonable ultimatum.  The Austro-Hungarian Grand Duke Franz Ferdinand had, of course, been assassinated in Sarajevo.  The Austrians blamed the Serbs and, wanting a war, issued an unreasonable ultimatum.  When Serbia rejected one part of it, Austria went to war and WWI had started.

The more fundamental causes of the war are many.  They include:

• Nationalism.  Nationalism caused people like the Slavs of the Austro-Hungarian Empire to resent being ruled by Germans.  This was behind the assassination.  Nationalism also caused Germany to back Austria and Russia to back Serbia.   Thus, nationalism helped to start the war and to broaden it.
• Militarism.  Many countries glorified their militaries at this time.  They felt the military was an expression of national strength and honor.  They wanted to have strong militaries.  This ended up causing an arms race as well as a culture in which it was accepted that military force should be used to solve problems.
• Imperialism.  All of the major European countries were scrambling to get as much imperial power as they could.  This was partly for economic reasons and partly for reasons of prestige, as with Germany’s desire for its “place in the sun.”

These underlying factors, when unleashed by the assassination in Sarajevo, caused WWI to begin.

In the late 1800s and early 1900s, many nations, especially the major European powers, started forming political alliances, both publicly and secretly. The main reasons for the formation of these alliances were power and protection—the kingdoms and nations wanted to make sure that they'd be protected and that their political power would remain intact in the event of war or potential conflicts and disagreements.

Thus, in 1881, Germany, Italy, and the Austro-Hungarian Empire formed an alliance against France, known as the Triple Alliance, while France, Russia, and Great Britain formed the Triple Entente in 1907. Italy and several other nations, such as Serbia, Japan, the US, and more, would later join the Triple Entente, which would become known as the Allied Powers, while Germany, Austria-Hungary, Bulgaria, and the Ottoman Empire would be known as the Central Powers.

By 1914, the political situation in Europe was far from ideal; tensions were high, and countries and nations were basically preparing for war. Germany and Russia were adamant on gaining more power and had vast imperialist and nationalist ambitions, while the already established empires, such as France and Great Britain, were trying to expand their socioeconomic and political influence. On the Balkan peninsula, Serbia was set on uniting the Slavic nations into one Slavic state and wanted to liberate the Slavic minorities and gain independence from Austria-Hungary.

In fact, Serbia's nationalism and fight for independence was what motivated the Serbian nationalist group known as "Black Hand" to send Gavrilo Princip to assassinate the Austro-Hungarian Archduke Franz Ferdinand. A month after the assassination of Franz Ferdinand and his wife in Sarajevo, on July 28, 1914, Austria-Hungary declared war on Serbia, which marked the official beginning of WWI.

The root causes of World War I extend well back into the nineteenth century. This answer will address the more immediate events, namely those in 1914. The event that sparked World War I was the assassination of Archduke Franz Ferdinand, heir to the Austro-Hungarian Empire, in Sarajevo. The guilty party was a terrorist, a young Bosnian Serb named Gavrilo Princip, who was a member of an ultra-nationalist group known as the Black Hand. In short, this group wanted Bosnia-Herzegovina to be part of a pan-Serbian state, and the Austrian Empire stood in the way. In any case, the event was significant because Austria, with the support of Germany, held Serbia accountable for the assassination. The Austria-Hungary issued a deliberately provocative ultimatum to Serbia, demanding that Serbian leaders associated with the Black Hand should be brought to justice, and that Austria-Hungary be allowed to send officials into the country to run the investigation into the assassination. Unwilling to accept all of these terms, the Serbs turned to Russia, who threatened war if Austria-Hungary invaded Serbia. France promised to support Russia, its ally. When the deadline for the ultimatum passed, Austrian forces attacked Serbia, and Russia mobilized its armies. Germany responded by declaring war on Russia on August 1, and Austria followed suit. The German high command, hoping to avoid a two-front war, invaded Belgium as part of their plan to attack France through the so-called "Schlieffen Plan." Great Britain joined the war in solidarity with Belgium, on August 4. By the end of the first week of August, almost every major power had entered the conflict.  As historian Barbara Tuchman has observed, Otto von Bismarck was correct when he predicted that "some damned foolish thing in the Balkans" would drag the rest of Europe into war.