Train or Car- Salzburg to Italy?

I had plans to rent a car in Munich to drive in Bavaria then return it
in Salzburg where I'd board the train to Italy.

It would be better to return it in Germany and take the train across the border.

I figured train travel throughout Italy would be easy but it's looking
more difficult than I thought.

What are you finding difficult?

Would it be better to keep the German rental car and return it
somewhere near Venice?

That would be very expensive.

I'd like stay in picturesque Italian villages but that don't attract
big crowds, do these exist near train stations?

Do they exist at all in Italy? But South Tirol is popular and easy to reach from Austria. And if you avoid the main tourist hubs you might be able to find a less touristy place.

It would indeed be much cheaper to return the car in Germany: you could do so in Munich, or perhaps in Freilassing right across the border from Salzburg. Freilassing has frequent local trains to Salzburg, and perhaps you could find a taxi as well - it is only a few km away.

Thanks for the suggestions! Would it be ok to drive the rental car from Germany into Austria but then return it in Germany?

If you will use any motorways in Austria, you must buy a vignette for the car at the border. Short term is not expensive, only a few EUR. You just have to remember to do it.

Would it be ok to drive the rental car from Germany into Austria but then return it in Germany?

depends on the conditions of your rental - but usually yes.