On June 28, 1914, an assassin supplied by terrorists shot and killed the heir to the throne of the Austro-Hungarian Empire, igniting an already tense situation between Serbia and the Hapsburg-controlled monarchy in Vienna. By July 1914, a month later, the world was at war, and by the end of the war, Austria-Hungary would no longer exist, and Germany would be punished in the treaty that ended it...even though Germany had nothing to do with igniting "the powder keg of Europe" that started World War I.
A Bosnian terrorist kills an Austrian noble in Serbia so Germany and Russia go to war. Get it?
It's a little more complicated than who started what but Germany gets the brunt of the blame for the war because of how the fight between Austria and Serbia escalated so fast, and no attempt was made to de-escalate it. The resulting deaths of millions worldwide along with the destruction wrought on European battlefields and the use of poison gas left a bad taste in everyone's mouth (sometimes literally) throughout the duration of the war.
Why was Germany blamed for World War I?
While Germany didn't necessarily start World War I, it didn't do much to stop it, either. In fact, many historians believe Germany actively encouraged the war, despite the systems of alliances in place that should have deterred the European powers from fighting. The Germans knew if Austria-Hungary invaded Serbia, the Russians would intervene on Serbia's behalf. Then Germany would have to come to Austria's aid.
That's what the Germans wanted.
Russians were still carrying religious icons into battle instead of modern weapons.
Even though Austria was satisfied with Sarajevo's attempt to smooth things over, Germany convinced the Hapsburg Emperor that he could not only invade and win against the Serbians, but that Germany would have an easy time against all the other European allies. Germany really, really wanted a war with Russia to acquire new territory in the east, but couldn't justify it. Going to war to back its Austrian ally was more than enough and Austria had a reason to go to war with Serbia. So Germany kept pushing its ally despite calls for peace from the rest of Europe.
Finally, Austria agreed and attacked Serbia, which caused the Russians to come to Serbia's aid, which forced Germany to back Austria and France to back Russia. Then the Germans invaded France through Belgium, requiring England to intervene in the war as well. So Austria-Hungary technically started the war, but Germany tried to finish it. For four years.
That's why Germany takes the blame for World War I.