Well, in the First World War, Britain had been utterly humiliated, with the USA conquering Canada, British Caribbean, Australia and New Zealand, and liberating Ireland (where they kept bases), India and Malaya.
Before the war, Britain mostly traded with her empire and with the USA. After the war, Britain needed to resume this trade, and so, needed to renounce ambitions of reconquest (to get cordial relations with the USA, Ireland and India). Soon, Britain fully entered the US allies and trade network.
Then, there was the problem of Russia, Austria and Japan dominating Eurasia. Basically, Russia was dominating Central Asia, Persia and Near East (all the way to Sinai and Arabia), while Austria controlled Egypt, Libya and Tunisia. Both countries also dominated Eastern Europe and Balkans.
Historical British policy had always been to prevent one power (or group of powers) dominating the continent.
Finally, Japan (despite being on the British side in WWI, which overall lost) emerged as a victor, dominating China, Filipinos, Indochina and Siam.
And... Japan become a threat to the remaining British East Indies [OTL Malaya and Indonesia], as panasian imperialistic ambitions developed (and the IJN wanted more glory).
So, naturally, as Japan, Russia and Austria became the Imperial Pact, in response, the USA, Britain, Ireland and India formed the Alliance for Democracy. It was also a matter of culture (absolute monarchies vs liberal democracies).