Here 'harm' is meant in a diplomatic way. They put restrictions on the Spanish consulate. It is strong language, but nobody is talking about physical harm (just as Spain hasn't harmed Israel physically).
From the article:
According to these measures, Israel prohibits the Spanish consulate in Jerusalem from "conducting consular activities or providing consular services to residents of the Palestinian Authority", although it clarified that the measure does not apply to people with Spanish nationality.
So if a Spanish-Palestinian couple wants to sort things out to visit Spain or deal with administrative stuff they can't. Palestinians who have family in Spain and need to deal with their affairs can't now.
While it is not physical harm, it has huge psychological implications and many of which are equally terrible. Imagine a family member dies in Spain and you can't even go to the consulate to arrange for the funeral.
No chance. An open military attack would be the end of Israel. Spain is a EU and NATO member. Article 5 would be called and accepted by most NATO members. If not the alliance would be over immediately.
Lets assume the US noped out (which they would never do if Israel dared to attack Spain). That would be the end of NATO but Israel would have to deal with the EU. Even Spain by itself could cause some serious damage to Israel. And they wouldn't be by themselves.
I'm Portuguese, and my country is the historical rival of Spain. An attack on Spain would be like a direct attack on us and most EU members feel the same.
This, of course, is hypothetical. There's no way Netanyahu would pull such a dumb and unthinkable move.
that is the gist of most right wing/nationalist leaders' speeches. For the better part of the last decade Erdoğan has been doing the same against the EU (and international shadow enemies) to gain votes.