In its simplest meaning, a knot is tied in a string. If the knot falls apart, it "comes undone". The string isn't broken or damaged, but the knot is no longer a knot.
"All of this" is some THING which is a set of inter-connected things. If those connections fail, the THING "comes undone". The individual things are still there, but they are no longer connected to form a THING.