I think the better question to ask is: why should it have succeeded? Before reading and actually thinking about the topic, I approached the question in the same way as (I assume) you, by just sort of taking it as a given that the Central American states should just 'naturally' be part of one larger state. As a little note: I'll refer to Guatemala, El Salvador, Nicaragua, Honduras, and Costa Rica as the Central American states/nations/whatever. Just a reminder that this doesn't include Panama, which was part of Colombia after independence from Spain, and has a more separate history.

I'll start off by pointing out that there were many projects of Central American union. Central America was (sort of) united as a part of the Mexican Empire from 1821-23. After the collapse of the Empire, there was a 'Federal Republic/United Provinces of Central America', two 'Federation(s) of Central America', a 'Greater Republic of Central America', and two attempts to unite all the states by force (both failed). There were, in the 19th century, more successful attempts at regional cooperation and integration, though not of actual union.

A big part of the failure was the fear and the rivalries present between various parts of Central America. Guatemala, in the early 19th century, is estimated to have had about as large a population as all the others combined - figures for population aren't all that reliable, but it is at least clear that Guatemala had a much larger population than any other state. Additionally, further north, particularly in Guatemala and to a lesser extent in its neighbours, there was a large indigenous population. Costa Rica, on the southern end, had very few indigenous people left. This was at least a partial concern. Guatemala, from which the colonial 'Kingdom of Guatemala' and the Audencia were run, was often viewed with suspicion or hostility by the other states, wary of being dominated by it. The guarded attitudes of the various republics towards each other certainly wasn't just paranoia: fighting over ill-defined borders, supporting rebel groups seeking to overthrow neighbouring governments, and installing friendly people into power were all fairly common occurrences. And the fear of Guatemala wasn't necessarily unjustified, as they were undoubtedly the most powerful individual state, and engaged in the above-mentioned activities more than anyone else.

Aside from this mistrust, there was also often a lack of enthusiasm for union. Costa Rica would often prove particularly reluctant to take part. What, in the minds of many of its leaders, did they have to gain by submitting to a government in Guatemala, or El Salvador? Why couldn't they just run their own affairs? It was nothing but trouble, it seemed. While we may think it 'natural' for Nicaragua and El Salvador to join, few people from either had ever had anything to do with the other, and felt no overwhelming affinity that would require a union. Possibly one of the biggest attractions of a union would be for a united military defence, but for most of the 19th century, there was little risk of foreign attack.

It should also be pointed out that when we talk about the failure of the Federal Republic/United Provinces (or any subsequent attempts) it was more the case that it never properly began to function, rather than it breaking apart. An assembly was brought together and presidents elected, but the provinces were already running their own affairs, and continued to do so. The federal government never really did much (because it couldn't really do much). Indeed, at this time the various states of Central America barely had any power over their own (poorly defined) territory. Rivalries and sometimes armed conflicts between towns within the states often broke out. All the governments of Central America were pretty much broke, and had very limited capacity to raise any money, often relying on loans, and just as often defaulting on them.

Some, at the time and now, have blamed first the British and then the United States for sabotaging attempts to unify. I think this is accurate for the early 20th century - not in that it was guaranteed that union would have happened were it not for US interference, but rather that the US prevented it from happening. For the 19th century, and the majority of attempts at union, I think this is inaccurate. British and American diplomats were actually sent to the Federal Republic in the 1830's, but were soon left wondering where exactly the federal government was, and sooner or later just had to accept that they would be dealing with the individual republics. The British and Americans didn't necessarily have an interest in the union succeeding (some might debate that point), but they didn't have to do much for it to fail.

I feel like I've just rambled on a bit here. Did you have anything more specific you wanted to ask? If you can get a copy, I'd recommend The Failure of Union by Karnes, which is in the books and resources list on the right.