They won by dominating the match, dictating the tempo as they will by possessing the ball, thus the seemingly flurry of short passes without attacking progress. The beauty is the number of connections they make, even difficult passes made it through!
Poor defending wise, Puyol wasn't there. But even with Puyol, Spain's defense is already poor as it is, all of their defenders were part of the passing systems, so when you are on the attacking momentum, the defenders have to come forward to maintain the pressure. But, when the chain breaks there, it is over, if Pique or Ramos can't outrun the attacker, only Casillas is left.
Last time, the Germans weren't able to figure it out and try to face it using their rigid style, the Netherlands got frustrated and played rough instead. But Italy was able to read the game, try to disrupt the harmony, and wait for their chances.