The renunciation was due to WWI . Alfonso XIII asked the Infante to renounce his Bavarian rights if he wanted to keep his rank in the Spanish army.
He and his children lost their rights, but he was allowed to keep his Bavarian title and style. Later in the 50’s, when Fernando’s children wanted to be recognised as members of the Bavarian Royal House, Crown Prince Rupprecht reminded them that they were not members of that house. Of course, they could use de Baviera as surname, but not as a royal title
I understand that he renounced his German royal titles and succession rights to the kingdom, when in 1914 he remarried. The reason was that his second wife was of unequal birth: the union was not in accordance with the Wittelsbach house laws at the time, and hence could not be dynastically approved by his kinsman, the self-proclaimed King Ludwig III.
My question is: did he renounce the said titles and succession rights for his descendants as well -- including those from his previous marriage? That would not have been justified, since his first wife (Infanta Maria Teresa of Spain) was clearly of equal birth. As I understand, she and her children were all German (as well as Spanish) royals: I believe they were all styled with the title Prince(ss) of Bavaria, with the qualification of Royal Highness.
Just when and how did Ferdinand's children forfeit their dynastic membership in the house of Wittelsbach? I see that even his sons were excluded from the line of succession to the Bavarian throne, as of 1918 (when the German monarchy got abolished and the Bavarian royal house was deposed).
Of course, they remained dynastic members of the royal house of Bourbon, retaining their Spanish succession rights. All were styled with the title Infante/Infanta of Spain, with the qualification of Royal Highness. But today, not even Ferdinand's male-line descendants are styled as princesses of Bavaria (only females remain: his elder son never married; although his younger son married and fathered two sons, only the elder of those married. The said elder son, now deceased, married but fathered only one child -- a daughter).
In official genealogies, I see that Ferdinand's grandchildren through Infante José Eugenio (who married a Spanish noblewoman) and great-granddaughter through José Eugenio's son (who like his father married a Spanish noblewoman) are all styled with noble, but not royal, titles. As male-line descendants of King Ludwig I of Bavaria, however, they have "Baviera" in their names.
Of course, the Spanish naming system being what it is, a child adopts both his father's and mother's surnames. As it was, José Eugenio's daughters also married into the nobility: his grandchildren through them, then, have "Baviera" as a secondary name, whereas his granddaughter through his son has "Baviera" as a primary name (just like her aunts).
One would think, however, that in light of the house of Wittelsbach today having done away with all marital standards (with no requirement that dynastic members marry only royalty), these male-line descendants of Ferdinand might bear Bavarian royal titles, whatever might be said about succession rights (yes, I know that it's in the male-line only) ...