To answer your question about the monarchy's "fall", it's interesting to analyze the decline of the Spanish Empire as a whole. The fall of the empire was brought about by many factors. It arguably began in the mid-17th century. Evidently, the system of the Spanish Empire is what was flawed. Their exploitation of their colonial territories provided revenue, which they in turn reinvested into maintaining and defending those territories, upkeep was more expensive than they had perceived and since their income was not always certain, they ended up depending on loans and promise of payments. The galleons of the Spanish Armadas were made obsolete by constant pirate attacks, unreliable sailing conditions and privateering. The treaty of Tordesillas, had always left an envious feel towards Spain and Portugal by the rest of Europe. Forming an Empire is one thing, maintaining it quite another. Jealous maritime powers often threatened Spain's oversees territories, civil unrest and native uprisings proved costly, and pioneering this form of empire, they made the mistakes that would be analyzed and improved upon by other European powers. They basically, stretched their reach too thin, and became directly involved in most of their target interests. Back in the European theater, debt, a sequence of bad (mostly inbred) monarchs and mediocrity led to stagnation with regard to the other European superpowers.

In 1808, Napoleonic troops invaded the Iberian peninsula, exiling the Portuguese royal family to Brazil and the abdicating the Spanish King. Napoleon placed his brother on the Spanish throne, provoking an uprising from the Spanish people, the Peninsular War. This led to a Spanish American crisis of legitimacy of crown rule and movements that resulted in political independence. In Spain, political uncertainty lasted over a decade and turmoil for several decades, civil wars on succession disputes, a republic, and finally a liberal democracy.

A long period of wars followed in America from 1811-1829. In South America this period of wars led to the independence of Argentina (1810), Venezuela (1810), Chile (1810), Paraguay (1811) , Uruguay (1815) Chile (1818) and in Peru (1821). The Bolivarian euphoria led forces that won independence between 1811 and 1826 for the area that became Venezuela, Colombia, Ecuador, Perú and Bolivia, with Mexico soon to follow. Central America provinces became independent via Mexico's independence in 1821 and joined Mexico for a brief time (1822–23), but they eventually separated.

The Spanish-American War did not help either for obvious reasons.

In Europe with the Bourbon Restoration, Spain had failed to reach the extent of its past strengths in its various fields.

With the reign of Alfonso XIII, there were a string of failures and crisis that exposed loopholes within the restoration policies and the constitutional system itself. This did not cease to exist and therefore led to further clamor for reform. The military discontent, the fear of anarchism or proletarian revolution, and the rise of nationalist movements ultimately caused great agitation between the civilians and the military. Eventually, the Captain General of Catalonia, orchestrated a coup d'état, after a manifesto blaming the flawed parliamentary system. Alfonso XIII named him Prime Minister. The General proceeded to suspend the Constitution and assume absolute powers as dictator.

He created the Unión Patriótica Española, which was meant to be the sole legal party, abolishing all other parties. During this time, he rejuvenated business and public services, which caused his government to go bankrupt. He lost the support of the military and faced serious health problems. Opposition to his regime was so great that Alfonso XIII stopped supporting him and forced him to resign in January 1930.

Alfonso XIII, in an attempt to return gradually to the previous system and restore his prestige, called on General Dámaso Berenguer to form a government. This failed utterly, as the King was considered a supporter of the dictatorship, and more and more political forces called for the establishment of a republic. Berenguer resigned and the King gave the government to Admiral Juan Bautista Aznar. Aznar called for local elections on 12 April 1931 in order to satisfy the democrats and republicans, to replace the dictatorship's local governments and to gradually re-introduce the restoration.

Although the monarchists had not lost all their support, the republican and socialist parties won some significant victories in major cities. Street riots ensued, calling for the removal of the monarchy. The army declared that they would not defend the King and on 14 April he fled Spain. The Second Spanish Republic was immediately established under a provisional government led by Niceto Alcalá-Zamora.

The Spanish Civil War followed in 1936. The "Republicans," who were in sync with leftist ideals, in an coalition with the Anarchists and Communists, fought against the Nationalists, a Falangist regime led by General Francisco Franco from the south. Of course we know what happened after.

Following Franco's death, the restoration of the monarchy has been naught but trivial with regard to its paramount significance in the past.