Foundation species such as seagrasses modulate critical ecosystem processes, promote biodiversity, and structure community spatial and temporal dynamics. Hence, they play a key role in mediating the response of biodiversity to environmental changes. The breadth of their contribution to biodiversity maintenance and the potential cascading effects of their alteration remain unclear as we lack a comprehensive understanding of the intricate mechanisms governing their response to environmental changes and that of their associated fauna. Indeed, the mechanisms involved are often studied in isolation or at scales that only provide incomplete representations of the complex functioning of these ecosystems. This study aimed to clarify the direct and indirect relationships linking the environment, seagrass, and their associated faunal assemblages, using structural equation modeling (SEM). To this end, we review the literature to derive theoretical models of the functioning of seagrass ecosystems and test them using long‐term monitoring data covering 14 years of nine different Zostera marina seagrass beds across 500 km of coastline. We show that contradictory relationships and ambiguities regarding seagrass–biodiversity relationships emerge from the currently available literature (covering experimental, observational, and modeling studies). The SEM approach allowed us to clarify these direct and indirect relationships and resolve most ambiguities. In particular, we show that seagrass mediates the effect of the environment on its associated communities. However, this mediating effect is different, both qualitatively and quantitatively, for epifauna and infauna. Unexpectedly, the diversity of benthic macrofauna appeared to be controlled and promoted by the biomass rather than by the shoot density of the seagrass beds. We also provide quantitative estimates for the direct and cascading pathways linking seagrass biodiversity to environmental changes. Overall, by synthesizing, clarifying, and quantifying the multiple relationships linking a foundation species such as seagrass to its environment and associated biodiversity, we contribute to a better understanding of seagrass meadows functioning and help predict the potential consequences of foundation species alteration on their associated fauna.