The Arch Duke was assassinated by what the west would call a terrorist. Of course Austria would want revenge.

The problem was that the Austro-Hungarians had no compelling proof to support the measures they wanted to take. The assassins were all born in Bosnia, were Bosnian nationalists, and carried out their actions in Bosnia. The most that Austro-Hungarian authorities were aware of was that the assassins had been trained and supplied across the border, and minimally at that. But they wanted to use the opportunity to force deliberately harsh demands upon the Serbs, in the hopes of provoking a war. When the Serbs agreed, with qualifications, to the ultimatum, the immediate response was to shell Belgrade. When the Russians mobilized, to deter the Austro-Hungarians, the immediate German response was to issue ultimatums to Russia and France (also meant to be unacceptable) and then declared war shortly afterwards. They were the aggressors from the start.

Were they all scared of Russia?

'They' were not scared of Russia. Not only were Germany and Austria-Hungary geographically isolated, but they also diplomatically isolated themselves, through foolish atrocities like the ones carried out in Belgium and Serbia, unrestricted submarine warfare, and deporting Belgian and French civilians for forced labour, among other things.

Sources:

• Catastrophe by Max Hastings
• July Crisis by Thomas G. Otte
• The War that Ended Peace by Margaret MacMillan
• Krieg im Frieden by Gunther Kronenbitter
• The First World War: Germany and Austria-Hungary by Holger Herwig
• A Scrap of Paper by Isabel V. Hull