Precise etiology of diabetes is still not understood well. Diabetes melitys type-1 (DM-1) is autoimmune disorder and like the rest of autoimmune disorders the exact cause is unknown. The immune system destroys beta-cells in the pancreas and in time body stays without insulin. Diabetes type-2 also has unknown etiology. Here, insulin producing cells are not destroyed but they ether not produce enough insulin when needed or target cells do not respond to the the insulin properly (insulin resistance).
It seems that in diabetes not only carbohydrate metabolism but lipid and protein metabolism are also disturbed. That is the possible reason why long-term complications from diabetes can't be prevented even if glucose level is brought to normal. But anyway, proper control of the glucose level prevents short-term complications (hyperglycemic comma and ketoacidosis) and delay long-term complications (heart attack, stroke, nerve damage, kidney damage and eye damage).