Eelgrass supports diverse benthic communities that ensure a variety of ecosystem functions. To better understand the ecological processes that shape community composition in eelgrass at local and regional scales, taxonomic and functional α‐ and β‐diversity were quantified for communities inhabiting five meadows in France. The extent to which environmental factors affected local and regional benthic communities was quantified by considering their direct and indirect effects (through morphological traits of eelgrass) using piecewise structural equation modeling (pSEM). Communities supported by eelgrass had higher species abundances, as well as taxonomic and functional diversity compared to nearby bare sediments. No significant differences were found between communities from the center relative to the edges of meadows, indicating that both habitats provide similar benefits to biodiversity. The presence of a few abundant species and traits suggests moderate levels of habitat filtering and close associations of certain species with eelgrass. Nevertheless, high turnover of a large number of rare species and traits was observed among meadows, resulting in meadows being characterized by their own distinct communities. High turnover indicates that much of the community is not specific to eelgrass, but rather reflects local species pools. pSEM showed that spatial variation in community composition (β‐diversity) was primarily affected by environmental conditions, with temperature, current velocity, and tidal amplitude being the most significant explanatory variables. Local richness and abundance (α‐diversity) were affected by both environment and morphological traits. Importantly, morphological traits of Zostera marina were also influenced by environmental conditions, revealing cascading effects of the environment on assemblages. In sum, the environment exerted large effects on community structure at both regional and local scales, while plant traits were only pertinent in explaining local diversity. This complex interplay of processes acting at multiple scales with indirect effects should be accounted for in conservation efforts that target the protection of biodiversity.