Where to stay in southern Bavaria with decent access to sights?

By public transport, Munich is the central point between the eastern towns (B'gaden & Salzburg) and the first 3 destinations (which cluster together very roughly.) But Munich isn't a particularly good base for day trips to these places because of the long distances. And it's pricey, which you already know.

You could stay 3 nights in the east and 2-3 nights in the "Schloss" zone - with a stop in Munich in between for several hours to see something there.

I'd spend a couple days in Garmisch and then a night in Munich. You can get a train from there to Salzburg easy. One night in Munich shouldn't break the bank if all you want is to do Octoberfest.

We lived in Augsburg (50 miles west of Munich) for four years and always visited the fest by train. Consider booking a hotel there.
Book early as even Augsburg fills up.

I think if I were doing that trip, I would base myself in Berchtesgaden or Salzburg first, with a day trip to the other, then move to Oberammergau for the three Schlösser. Myself, I would prefer to stay in the much prettier Berchtesgaden, but Salzburg is a little faster to get to, and either way there is the RT bus trip to the other. Then I would move to Oberammergau. O'gau is a short bus trip to both Hohenschwangau and Linderhof and not to far from Munich for a day trip to the Oktoberfest. All this travel can be done by public transportation.

If you insist on a single base, then it would depend on whether you are using just public transportation or a car. Using the trains, Munich is right in the middle between Füssen and Salzburg, and you don't want to use it as a base for 5 days, so I would pick someplace west or east of Munich on the route between them.

On the west, I would use Landsberg am Lech as a base. From Landsberg, it is about 1h40 to Füssen, with a change of trains in Kaufering. Kaufering, actually, is on the main line from Munich to Füssen, about 25 minutes from Landsberg on a spur line. Landsberg is a delightful place to stay in it's own right. I stayed here - it's economical and convenient. I was there the last weekend of Oktoberfest, and it was busy, but not booked.

From Landsberg, it's about 45 minutes by train to Munich Hbf, so you could do the Oktoberfest as a day trip. The route to Salzburg goes through Munich, so you could stop there on the way to Salzburg.

Landsberg is closer to Füssen than it is to Salzburg. On the east side, Rosenheim is a major train stop and closer to Salzburg.

If going by car, I would choose somewhere in the Voralpen south of Munich. The quickest and recommended car route from Füssen to Salzburg goes through Bad Tölz, so that is what I would pick as a single base with a car. You could use the rail line Bayerische Oberlandbahn (BOB) to get into Munich so as not to have to park there.

Another vote for Oberammergau.

We enjoyed Oberammergau's Hotel Wittelsbach: https://www.hotel-wittelsbach.de/e-home. Central location in town, but quiet in the evenings; excellent breakfast; pleasant, professional staff. Oberammergau has its own charms and is also a good base for seeing other sites nearby (GoogleMaps says 45 minutes drive to Neuschwanstein/Hohenschawangau.)

That said, O'gau wouldn't be a comfortable day-trip to Salzburg. The Forum experts will provide better advice, but I'll be surprised if a single base will work for all your targets.

I feel like this answer is really dependent on whether you've decided to rent a car or not.

I generally prefer train travel and Lee will tell you how to get around via public transit, but as someone who's visited these areas multiple times by both modes of transit, if you want to hit all these things, a car will make your life a lot easier.

Are you planning on visiting Munich for just one day from your 'base'? Are you open to two bases or would you rather spend more time in transit without having to change hotels?

I'll be surprised if a single base will work for all your targets

Particularly if you plan (which you should) to spend two days, at least, in the Salzburg/Berchtesgaden area. No sense traveling back and forth twice.

My favorite place in Oberammergau is Gaestehaus Richter. Frau Richter is a gracious hostess and speaks pretty good English.

We will have a car, but I was wondering if taking the train was a better option to Austria, because of the special pass we would need to purchase. If we stayed in Reutte, could we see all 3 area castles in one day, or would we need 2? Thinking we could then drive to Berchtesgaden to see the Eagle's Nest and Documentation Center, stay the night, drive to Munich (and stay possibly in Dachau), then hit up Salzburg by train at some point. Yes, I know that it is a little bit of backtracking, but we want to be in Munich for the opening day of Oktoberfest and to see the Dachau camp. I can move a couple things around to make this happen. Does this seem logical/doable?

Whatever you plan, you'll probably be setting aside a few of your wishes.

Here's a different suggestion, one that allows you to stay in one place and that might be a good deal easier on you than all those logistical moves you are contemplating.

• Stay the full 5-6 days on/near Chiemsee Lake. Prien is one of several towns where you might find a "Ferienwohnung" (AirBnB or similar apartment.) Note that nearby Bernau could work well too. From either town you'll be about one hour from Munich and one hour from Salzburg by direct train. A day trip to Dachau is doable via public transport through Munich as well. You'll have King Ludwig II's real masterpiece, Herrenchiemsee Palace in your back yard. It's on an island in the middle of the lake.

• With the car parked outside your apartment, you can use it for rural outings (if you wish to keep the car, that is. You don't have to.) There are MANY great places to visit in this area besides the ones you've collected from your Rick Steves materials. You were hoping to see some castles... well, you could drive about 1 hour to the town of Burghausen and visit Europe's Longest Castle. Another outing: Wasserburg am Inn, an interesting and attractive place only about 40 minutes north.

• Very importantly, from Prien, you don't HAVE to use the car to reach Munich, and you don't need to drive in Salzburg or Austria. Trains run all day long from Prien into Munich as well as Salzburg - and back. The Bayern Ticket day pass makes these longer day trips very affordable. Trains go other places too if you like. For example, take the direct train from Prien to Aschau, and the nearby Kampenwand peaks (near Aschau, very close by train to Prien) can be ascended by cable car lift for a nice view of the mountains and the Chiemsee Lake area. There are some very nice walks up there as well as a place for refreshments.

• This local accommodations directory may be helpful for Prien.

This plan leaves out the "castles" near Füssen (which actually are all more modern palaces, not castles) but with Herrenchiemsee in your plan you are probably seeing the best of Ludwig's palaces. N'stein is the most well-known of his works internationally, but I found the tour disappointing myself, and I'm not alone... it may just be a lot more hype and trouble than it's worth:
https://www.dw.com/en/is-neuschwanstein-all-its-cracked-up-to-be/a-17887035

Thanks everyone, for your replies!
I just found out that the grotto at Linderhof (the one thing I REALLY wanted to see!) is closed for updates through 2022, so we're nixing all the castles in that area (I've already seen Neuschwanstein, hubs hasn't). We may end up staying a little longer in Salzburg since we will now have an extra day....