I would say Germany's suspicion that France wanted to invade were 100% founded. France was defeated by Germany in the Franco-Prussian war 40 years earlier, and France was utterly humiliated. Otto Von Bismarck new this was a mistake, and tried to urge his Generals to go 'easier' and France and relent. However this was to no avail. Therefore Bismarck set up the Alliance system with the understanding that France would inevitably try and invade.

However - the alliance system pretty much relied on Germany having a good alliance with Russia. Of-which they were originally on good terms (and therefore not an existential threat) - However the ascension of Kaiser Wilhelm undid all this. He immediately alienated the Russians and forced them into a treaty with France.

To answer your question, it didn't really matter if Russia was an existential threat or not. As long as they were on bad terms Germany would have to fight a war on two fronts - because France would look for any reason to go to war with Germany. This is all Bismarck tried to avoid - he even famously quotes: 'The secret of politics? Make a good treaty with Russia.'

tl;dr: France was an existential threat - Russia wasn't, but that didn't matter because war with Russia would always mean war with France.

von Moltke the Elder thought of the Franco-Prussian war as an opportunity to devastate France to the point they could not recover and buy Germany safety on their Western Border for a lifetime. He was denied by Bismarck, leaving France beaten but not destroyed. Moltke also recognized that a new form of warfare had awakened. Large industrial powers with massive populations in the tens of millions could absorb and inflict terrible losses without breaking. They could always fight a holding action and conscript another million or two troops to throw into the grinder. As a result his war plans as chief of staff after the war focused on defense, and the threat of a two front war with France and Russia.

"If war should break out no one can estimate its duration or see when it will end. The greatest powers of Europe, which are armed as never before, will fight each other. None can be annihilated so completely in one or two campaigns that it would declare itself vanquished and be compelled to accept hard conditions for peace without any chance, even after a year’s time, to renew the fight. Gentlemen, it might be a seven, or even a thirty years’ war – but woe to him who sets Europe alight and first throws the match into the powder-barrel!" General Helmuth von Moltke, Chief of General Staff, Imperial German Army

translation of quote borrowed from German Strategy and the Path to Verdun: Erich von Falkenhayn and the Development of Attrition, 1870–1916 by Robert Foley

The threat to Germany was probably not an existential one the way Poland was threatened with invasion from two sides and being divided and absorbed into it's conquerors in the late 1930's. Rather it was a dual threat. On the one hand, Germany had to grow or die to a certain extent, meaning they had to continue to accrue power to keep up with France and Britain, and to a lesser extent Russia. The second side of the threat was waiting for those nations to build more power and attack them first, and suffer losing a humiliating war and basically going through what France did after the Franco-Prussian war. France was in a worse position after this war than before, but it bears mentioning that even losing two provinces to Germany France still was a wealthy and populous nation with a dynamic culture, with Paris the center of arts of all of Europe in the late 19th and early 20th century.

Because of a series of bad diplomatic moves Germany had managed to align the three most powerful nations in Europe (England France and Russia) against them with only Austria-Hungary and Italy (sort of) as allies. They had very little chance of winning a European war in 1914, and the most generous conclusion you can draw from the behavior of their general staff was that they welcomed the war only because they knew this was only going to get worse and they felt they had to roll the dice while the odds were still at least slightly feasible. Of course, they may have been so deep into denial they really thought they could win, certainly many German officers were confident of victory, at least below staff level.

Ultimately Germany was under threat, but not under threat of annihilation, just under threat of being beaten back and relegated to second class status among European powers. And that is likely why they felt on some level WW1 was necessary, to keep from being the whipping boy of the French and English.

As far as the war being local between Austria-Hungary and Serbia, sure, that could have happened, if Russia had stayed out of it. Austria-Hungary certainly had a cause to go to war with Serbia, it's fairly certain the Serbian government was involved on some level in the assassination of their Crown Prince along with his wife. What level is difficult to assess, some members of Serbia's military intelligence apparatus were co-conspirators, no one knows exactly how high up knowledge and approval of the conspiracy went.

For political reasons neither the Serbs nor the Russians wanted Austria-Hungary to build a third kingdom in their empire of Slavs, which would have served as a bulwark against the Serbian nationalist dream of creating a pan Serbian state, a sort of earlier version of Yugoslavia. Had Russia stayed out and allowed Austria-Hungary free reign to punish the Serbs the war could have been avoided, or at least delayed. A strong Austria-Hungary controlling the Balkans would have checked Russia's long ambition for a warm weather port and Russia was willing to go to war to prevent the Austrians from establishing that presence.

France looked at this partly as an obligation, partly as revenge for the Franco Prussian war, and more than anything as a chance to check an aggressive and expansionist German state they viewed as a threat. It is worth noting in this context that French prewar planning and training was almost entirely focused on offensive warfare, with bayonet charges (really, bayonets into machine guns) being heavily stressed as the preferred tactic. So yes, France wanted a war, not only that, they wanted a war where they could attack and attack and attack and drive the Germans back. Jingoistic stances dominated French prewar military thinking and their staff was obsessed with the image of proud French soldiers wearing bright red and blue (national colors) uniforms charging into German positions with fixed bayonets.

So yes, the threat to Germany from France was real, at least on some level. The Germans were entirley aware they were pretty well hemmed in, and they knew exactly what the French military was thinking. They also knew that because of a series of bad diplomatic blunders their position was not only very bad but was likely to erode further.

If you want sources (beyond the above quote) there are literally hundreds, probably thousands of books on this subject. The one I have read most recently is The Great War by Peter Hart, it's fairly widely available and gives a perfectly adequate overview of the diplomatic and military situation in 1914.