How could a dispute between the tripe alliance and the triple entente draw all of europe into the conflict?

It's important to know the difference between an alliance and an entente in order to answer this question.
alliance means that when one enters a war, every ally of that country enters as well.  entente means that when one enters a war, others are not required to.
the Triple Alliance meant that once war started for Austria-Hungary, war also began for the Allied German States and Italy.
however, although Serbia (where the Alliance was attacking) was "friends" with the entente, it was not a member of the Triple Entente--and because as an entente they were not required to fight for one another anyway--it was up to France, Britain, and Russia had the option to join or not.
but all ended up joining because, to put it jokingly, "their friends are fighting our friends!"