What is often termed "Spanish" in the United States is actually Castillian, one of the four major languages spoken in Spain (the others are Catalan, Galician, and Basque/Euskadi). The only reason Castillian acquired a privileged linguistic status is because when Spain became a unified nation in 1492, the Kings who carried out that project were based in Castille. So, there are five major languages in the whole peninsula (four in Spain plus Portuguese), not two. Besides those, there are some differences in how the same language in spoken in different cities, etc. The differences among those languages started shaping up as soon as Latin was mixed with the pre-existing languages. Keep in mind, though, that while Castillian, Catalan, Galician, and Portuguese are all Romance languages, Basque/Euskadi is a non-Romance language and is widely different from all other Iberian languages in terms of grammar, vocabulary, and pronunciation.
