rachael,
How early to book will likely depend on the destination and which type of accommodation you're going to book. For example, if booking hotels in the Cinque Terre, I'd probably start inquiries at least in February (assuming they have someone monitoring their websites that early). If your booking an Air BnB site, you may not have to start that early (not sure, as I travel solo so I only use hotels).
Most hotels these days are "bed & breakfast" and many of the ones listed in the guidebook are quite reasonably priced. You'll need to be prepared and flexible with breakfasts as those can vary with country and specific hotel. Many in the cities you're visiting will serve the "typical" European breakfast with cold meats, cheeses, buns, bread, yogurt, cereals, perhaps hard boiled eggs, juices and coffee. In my experience, hotels in Germany have the best breakfasts, although a few that I use in Italy are also good. I don't know if Air BnB places offer breakfasts?
You might also want to do some research on how meals in Italy are structured (ie: Antipasti, Primi, Secondi, Contorni, Dolci, etc.). If you order the "full meal deal", it will get expensive in a hurry! I typically order a Primi dish (Pasta) and a salad, and that's all I can eat.