A lot of the vibrant small villages and towns in rural Germany are struggling. Healthcare is a huge problem, for example, and there are attempts at solving the problem with mobile clinics but that's only fixing a symptom. Commuting is another issue as a lot of unskilled labor is put out of business by the larger businesses who can undercut them on prices. For example a local corner store may go out of business because they cannot purchase in bulk due to the small population, so an Aldi moves in 2 towns away, puts all the corner stores within a 10km radius out of business, and now all those employees have to compete for limited positions AND commute on top of that.

Germany is probably exceptional, because as you say it's doing pretty well. Italy is full of abandoned villages: https://www.irishtimes.com/life-and-style/homes-and-property...

Historically Germany has been a very decentralised place, have a look at a map of the Holy Roman Empire. It was also in recent position of being split in two, with the capital of West Germany not being connected to the rest of the country. This almost certainly why it's industry is spread out to smaller towns and cities.