On the surface, this looks a fairly easy question to answer. Edward II failed as king because he simply failed to show enough moderation when it came to his friendships with Piers Gaveston and Hugh Despenser The Younger. In 1311, Edward was presented with a list of complaints, known as the Ordinances, which sought to keep his reign and power in check. The list was fairly extensive but the central complaints were the king's relationship and emotional reliance on Piers Gaveston and his dismal handling of Scotland where Edward was being hopelessly outwitted by Robert The Bruce. But I think the Scottish failures as bad as they were, and worse was to come at Bannockburn in 1314, may have been overlooked had Edward II allowed himself to be manipulated by his personal favourites so, I suppose, the question is perhaps more why did Edward become so fixated on Piers Gaveston and then Hugh Despenser which ultimately brought about his own downfall in 1326?
Well, Edward was clearly a likeable enough man. In the backdrop of disapproving tuts and sneering words of medieval chroniclers, Edward could often be found conversing with ordinary men who were perhaps going about their menial and every day work. For a medieval king, this was hardly what was expected of them. Such behaviour was regarded as being beneath their royal dignity. Whatsmore, Edward thoroughly enjoyed other peasantry pursuits such as building, digging ditches and so forth. Again, this met with much disapproval. Edward was not a conventional king.
Edward's father, Edward I, had raised Edward on the art of warfare, taking him on campaigns in Scotland. Young Edward could be found at the siege of Caerlaverock in 1300 so, judging by his upbringing, Edward should have been fully prepared for the difficult task of being king medieval king of England. But, during his rearing to be king, Edward began his friendship with Piers Gaveston which Edward I initially didn't mind but which grew to irritate him. As a young boy, Edward's mother, Eleanor died, to his father's dismal. Later in Edward's childhood, Edward I married again and he became close with his stepmother When you look over what we've seen so far, Edward seems to have been a person who built relationships easily and, when he became fond of some one, he became too attached to them.
This then is perhaps the crux of the issue. By nature, Edward was not a malicious man, certainly not compared to his father, although, during his long war against his nobles, Edward II certainly could show malice. His character was affable and genial, he bonded with people with relative ease and self serving people like Gaveston and Despenser could play on that to their great advantage whilst Edward failed to see through their selfishness. I don't think Edward's failings as king were necessarily because he was a bad man, per se but more because he just didn't have the stomach for the fight the way his father had. This is one of the problems with a monarchy passed between father and son. A king could trains his heir as much as he liked in the arts of kingship but if his son didn't have the gravitas then there was little he could do and it seems Edward I was aware of his heir's failings.