Christmas 2017 Suggestions? And Erzgebirge?

The majority of Christmas markets, particularly those in big cities, are very similar and they sell essentially the same cheap merchandise. It's more about the atmosphere than the shopping experience, particularly if the market is held in an attractive setting. However...

... I have not visited the Erzgebirge during the Christmas season, so perhaps some of the markets here may feature more interesting handcrafted wares...

... The market at Oberstdorf seemed to offer more artisanal, upscale crafts than many I have seen, but I believe their market only lasts one weekend...

... The food at the markets generaly consists of grilled bratwurst, and various cakes and cookies. Lindau's market offered more regional specialties than I've seen elsewhere, and more unique handcrafts. And the scenic backdrop on the harbor facing the Alps couldn't be better. Once again, though, the market only lasts for a few days.

Overall, though, just visit the cities and towns you want to see anyway, and take the market, if they have one, as an added bonus. Once you've been to a few Christmas markets, they all start to look the same.

I visited several Christmas markets (Christkindlmarkt) and must admit that I like the atmosphere. For me it is much more than the goods that are sold there. In the film below (from min 6 00 and next minute or two) you can see how that looks in Munich. https://www.youtube.com/watch?v=_3ws7Axe6wQ

We just returned in December from our trip to Germany and Austria. Our favorite sights/markets:

Rothenburg ob der Tauber - Christmas market is minimal but the town is totally worth staying for 2 nights or so. Touristy but even I, a German by birth, love it. (We met some German relatives from the north there for a long weekend and they loved it too). Preferred hotels are the Eisenhut (pricy but superb), Reichsküchenmeister, and Klosterstuble.

Munich - large market in the Marienplatz but the gem is an 'artisan' market in the Schwabing district. Easy to get to by U-bahn. We stayed at the Platzl Hotel, 3 min walk from Marienplatz.

Regensburg - lovely town with an historic 12-century stone bridge. Christmas market was unique.

Salzburg - not far from Munich. Nice market as well. We stayed at the Hotel Elefant, in the pedestrian zone around the corner from the Mozart birth house. Beautiful town, lovely Christmas atmosphere, Advent concerts, music of the season. Been here 4x and love it every time.

I agree with Tom's point - its about the atmosphere of the town/market rather than the goods - and Alexandra's recommendations. For big city markets, we did preferred Stuttgart and a day trip to Esslingen am Neckar a bit over Munich but only if you are in that area. Regensburg was the best combination of city and market for us.

The best part of being there was strolling the colorful markets in the evening, drinking a Glühwein and eating a freshly grilled wurst. If you want to buy something, do it during the day; the nights are sometimes a crush of people. Marienplatz in Munich was almost impassable on a Saturday night. Schwabing was better.

Restaurants were often booked for groups in the late evening. We went to eat early and agreed to move on before the reservation time.

We've done the Markets along the Rhine and the Markets along the Danube . . . and we LOVED them both. You will see some 'junk' made in China, but also LOTS of wonderful German and Austrian things. We always pack an empty duffle on the way there and put all our dirty clothes in it and pack all our Market purchases in our suitcase for the trip home. We have enjoyed every market, as the food and atmosphere is very different and usually near an amazing Cathedral. We enjoyed Passau (small), Regensburg, Nuremburg (the largest in Germany, but great food and products and a very neat German craft area across from the train station, easily walkable to the Xmas Market - great Cathedral in the middle of the market. Good Jewish Documentation Center, the Nuremburg Trials), Rhudesheim (small/quaint), Heidelberg (loved this town) . . . in Austria, Vienna and Saltzburg . . . in France, we loved Strasbourg, and also saw Colmar (small/quaint) and Riquewihr (small/quaint). Feel free to PM me with any questions. The food, gluhwein, gingerbread, chocolate are fantastic. We always come home with lots of amazing authentic things.

For the Erzgebirge region look into Annaberg-Buchholz. It's a little touristic, but probably has everything you are looking for in the Erzgebirge and Wiehnachten. Lost of shops for wood craft items. Mostly German tourists I think. Larger town and better than Seiffen in my opinion.

https://www.annaberg-buchholz.de/weihnachtsmarkt/en/index.php
https://www.annaberg-buchholz.de/en/

Thank you all for your great suggestions! I'll look into those options!

We may also want to visit the Erzgebirge region with its woodcrafting.
I'd also be interested in suggested routes and places to stay in those
areas.

This depends a bit on how long you will stay, if you travel by car or train, and if you want to see Dresden too. In this case I would recommend Freiberg. It's a medieval town, once the richest of Saxony, and lies halfway between Dresden and Seiffen, the village deep in the mountains with nothing but Christmas shops. Dresden offers one of the oldest and biggest German Christmas markets.
In the Ore mountains you should see at least Freiberg, Seiffen and Annaberg-Buchholz (see the interior of the main church). The Christmas markets of Schneeberg, Marienberg and Schwarzenberg are also pretty nice.
With some luck you could also experience some of the unique traditions of the Ore mountains, like the Miners Parades, which usually happen on weekends. That's easily doable. What's also quite nice are the Mettenschichts in the old mines, but at least the bigger ones are fully booked by now. And some of the hotels offer "Hutzenabende", a tradition were locals come together, sing, eat and have a good time before Christmas.
If you are interested in the culture of the Ore mountains, and the toymaking, you should visit the museum in Seiffen and the Manufaktur der Träume in Annaberg-Buchholz. You will notice that everything there is connected to mining, and if you want to visit a old mine there is one in the middle of Annaberg-Buchholz right opposite the church. Another very nice museum is the Terra Mineralis in Freiberg.
And some culinary recommendations: the traditional Christmas dish of the Ore mountains is the "Neunerlei". If you want to sit down for a coffee try a "Eierschecke" in Freiberg. And the most typical Christmas food of Saxony is the Stollen (the one from the Ore mountains is as good as the one from Dresden; just taste before you buy and don't buy the cheap ones) and Pulsnitzer Pfefferkuchen. Pulsnitzer Pfefferkuchen is a hand-made gingerbread from the small town of Pulsnitz near Dresden, which is made all year round.

I have been to Germany twice during Christmas time. From my experiences, I agree with those that say that it's the atmosphere of the city/town. I personally prefer the smaller towns' Weihnachtsmarkt. I went to both Frankfurt's and Heidelberg. I found the smaller town ones I went to (Hanau, Offenbach, etc) much more quaint and less busy than the big city ones. I enjoyed the smaller town ones so much so because of the atmosphere. It is true that almost all the Weihnachtsmarkt have/sell the same stuff so you will see the same things from city to city. I would recommend that if you have the time, visit each city/town's Weihnachtsmarkt.