Are large denominations of Euros readily acceptable?

Hotels, OK. Restaurants, starting to be a problem. Almost everywhere else, big bills cause difficulty. It becomes a bit of a game to break your 100s and 50s into more acceptable denominations...

It depends on what you're paying for. If your restaurant tab is, say, 50 euros or more you can give a 100-euro note and get change. Same for hotels: for a 150-euro one-night stay you can pay with a 200-euro note. On the other hand, if you offer a 100-euro note for a 3-euro ice cream you'll have a problem. (If you use ATMs, don't ask for round-figure amounts like 300 euros. Ask for 295 and you'll get at least some small notes.)

As the others said you'll probably be ok with hotels/restaurants and probably with buying tickets for sights also but when you get into purchasing something from small shops that would be a problem, depending on how much you're buying of course. In my experience the smaller merchants prefer exact change if possible and if not then breaking the smallest bill possible (5 note). Try to carry a few 1&2 euro pieces with you.
Something to remember also....it seems like everytime I use an ATM I get either new or like new bills and they have a habit of sticking together. I've caught myself several times giving over 40 when I thought it was a 20 so you may want to be conscious of that.

Most places will not accept the larger notes. There has been quite a trade in counterfeit notes and they are wary. Also there has been a big crackdown on drug money and money laundering which causes most merchants and inn keepers to see them as no-go areas. If you carry only 100's and smaller you will be ok.

50 euro is quite normal because it's what you get from the ATMs with some 20s. At Billa supermarket (we are in Venice for the holidays), a 50 euro bill is passed through a machine to check authenticity. Anything bigger is unusual. However I saw a few 100 euro bills and a 200 euro bill the last couple of days at the Rialto fish market in Venice from older women buying lots of seafood for Christmas. I haven't seen a 500 euro bill for many years and we have been coming to the euro zone every year since before the euro. I do remember when I had a 500 euro bill tucked somewhere as emergency money. But that was quite a few years ago.

I bought euros in advance of my last trip to Italy. The 100s I used in paying hotel bills. The 50s I used at grocery stores, restaurants or other places where I thought they had plenty of change. I managed to keep a supply of smaller bills for lesser expenses.

Along this line, Roman taxis are notorious for cheating tourists. Give them a 100 Euro note and they'll swear you only gave them 20. I read a story awhile ago that they were going to start being more honest (someday). My tecnique is to keep a supply of smaller bills (by using big ones when I can and hoarding smaller bills), I always ask how much it will cost to get to where I'm going. Before I arrive, I have the correct amount with a tip ready (If the ride costs more than stated, they're eating into their own tip). I count the exact change out to them as I place it in their hand (demonstrating that I understand the currency).

Of course you can always ask, but most small shops don't want to give away all their change to a single customer. This thread makes me miss the old days when an ice cream cone might set you back 5,000 lira.

Hotels, restaurants you may be fine. But man, try to break a 50 anywhere else in Italy was frustrating and rather difficult.

On my last trip I found that street vendors were always able to break large bills....if you were willing to buy something.

It is a constant fight to find smaller denominations in Italy. Break any large bill, when ever you can and and save and hold all the change. Always work to make smaller bills and keep those. It is an exact change society.

Francis is right. In italy, I found they will thank you from the heart when you give them exact change but give you the stink eye if you make them give you change back.

Difficult to break large bills and just like in the U.S., people are leary of taking large bills as they are subject to counterfeiting.

A few years ago my husband and I had a major problem with 500 Euro but have travelled several times and 100 euro - never a problem! Even the banks were reluctant to take the 500!!!