Why Italy? One thing that seems overlooked (or talked around) is that when the modern era of reproduction guns started in the 1950's and 1960's the Italians were in on the ground floor. There were several people involved in creating the replica industry one of whom was Val Forgett who founded Navy Arms. There was a growing demand for affordable, shootable replicas of Civil War era firearms due to the approaching Centennial and Forgett found an Italian company with the available capacity and skill to make what he wanted. It really began with the 1851 Navy and soon many more followed.
The only other country that was a good source for affordable reproductions of classic arms at that time was Belgium and while they produced some nice guns (Turner Kirkland of Dixie Gun Works sold a lot of Belgian made guns early on) they were outdone by the fast growing Italian industry. In the US only Thompson Center got into mass production but they really only made variations of one rifle design and a single pistol. Spanish makers got a share of the market and Japanese firms were in it for a while but the Italians were the most successful. Demand for replica firearms has fluctuated over the years but the Italian firms have done rather well at figuring out what would sell and making it at an affordable price.