3 weeks in Switzerland 🇨🇭 and Italy 🇮🇹 ? Netherlands 🇳🇱? Germany 🇩🇪? Austria 🇦🇹?

If you jiggle your itinerary a little, you could ride the Bernina Express into Tirano, Italy, then easily get to Varenna in Lake Como. Does that interest you?
What a wonderful trip! Safe travels.

With kids I would stay in Murren instead of Interlaken. There are plenty of safe roads and paths for them to enjoy since cars are not allowed, there is a large community pool/gym, there are easy hikes, gondola rides, etc. Even the adventure of getting up to Murren is fun- a small train, then a gondola. You can go down the mountain for day trips, and retreat back to Murren at the end of the day. July in the mountains will probably not be as hot as you are used to, and the scenery is spectacular.
I thought Zermatt was nothing special. If I had kids in Germany I would definitely focus on the Rhine villages. Lots of fun castles, boat rides, the chair lift in Boppard, etc.

4 nights in Zermatt feels like a lot. I'd rather spend that time on Lake Geneva; the Montreux area has a lot to offer for kids and adults alike. Medieval castle, chocolate factory tour, boat rides...plenty of options.

And Switzerland ties in really well with Northern Italy, but Milan is not a good base. I'd rather spend a few nights on Lake Maggiore, and a few more on Lake Como (they're quite different).

Thank you for all for the valuable suggestions.

some follow-up queries I have in mind:

Would the experience in Zermatt going to be similar to the Oberland area? Is it redundant and can be skipped? and should I straight go to Lake Geneva area from Interlaken through the Golden pass line. Last time we stayed in Geneva city but do not find it too appealing this time.

How do I get to Northern Italy then if I go to Lake Geneva area? The sequencing of trip I cant figure out yet. Going to Luzern after arriving is Zurich seems straight forward. What should be the right sequence thereafter? How about Lugano? Is it worth it?

@ TravellingMom: I selected Interlaken as it just seemed easier with good and quick access to train system, range of eating and staying options etc. Tell me if you disagree.

@Pat @ Balso: Weather in Northern Italy in Mid July remains my main concern. What all is there to do in Tirano and Lake Maggriore ? Also I thought I would base myself in Milan and see the Lake Como area as day trips. I will need to fly out of Milan in any case if I do Northern Italy.

thanks

Instead of staying in Interlaken, stay up in the mountains! Grindelwald gives you a mountain town experience with good train options. Interlaken is a transit hub between two lakes. Grindelwald , Wengen or Murren are beautiful towns UP in the mountains with incredible beauty. You can drive to Grindelwald but not to Murren nor Wengen.
We have have stayed on three major Italian lakes and they are all different from each other, all are worth your time.
One of our trips was Milan to Lake Maggiore to Grindelwald to Pontresina ( near St-Moritz) to Lake Como to Milan MXP. We picked up a rental
car when leaving Milan and returned it to Milan MXP. We had to buy a Swiss Vignette( to use highways) for the car as we entered Switzerland.

If you stay on a lake, Maggiore or Como, you have the chance of a lake breeze and a breeze from the Alps which they are close to. If you stay in Milan you will have the heat from the city - all that concrete and asphalt store heat and all the city activity creates heat. The water in the lakes stays relatively cooler... and so beautiful, as are the Borromean Islands reachable in a few minutes by boat from Baveno and Stresa, and there is even a boat between Stresa and Locarno.

Lots to do on the lakes and nearby, and for kiddoes. Tour books and youtubes show a lot of it.

From Tirano you can easily get to the Lake Como area , especially Varenna, on the train route. Ride the ferries to Bellagio and Menaggio. IMHO, stay in Lake Como, the mornings and nights are so peaceful. I wouldn't stay in Milan.

Weather will be warm in the cities and towns, and brisk at altitude.
Wouldn't advise staying in Interlaken- if you want the Swiss experience, stay in the Alps: Murren, Wengen, or at least, Lauterbrunnen.
Have a great trip!

I think 4 nights in Zermatt is a lot, unless you have specific activities planned. I'd say add days to other parts of your trip. I also think OB and Zermatt is a bit redundant, considering the travel between the two.

I haven't spent time in Milano in July, but I hear it's very hot and lots of mosquitos. I'd head for a town along one of the lakes.

Getting from Lake Geneva to Milan is very easy: there is a direct train. It stops in Stresa on Lake Maggiore.
And yes, I would skip Zermatt because the Berner Oberland provides similar activities, but better/more varied. If you really want to see the Matterhorn, doing so as a day trip from the likes of Montreux is possible.
To depart from one of the Milan airports while staying on the lakes, if your flight is early you probably need a final night at an airport hotel, but that's still better than spending the whole time in Milan and doing day trips to the lakes.

Thank you again all of you for your suggestions. So far Zermatt seems to be an easy one to ditch based on your advise above. Revised itinerary that I am considering and would love your feedback is as follows:

Lucerne: 4-5 nights
Interlaken / Grindelwald: 6-7 nights (I take your suggestions about staying in smaller mountain villages like Wengen, Murren or Lauterbrunnen but purely our preference would be to stay in a larger commercial town for family conveniences). Given the number of nights I am sure we can cover the villages through day trip. Would like to do Brienz lake cruise, visit Harder Klum, Jungfrau or Schiltorn and other attractions easily accessible by train/gondolas. Any views on which ones to do or avoid? What else should be put on must watch which will not require too much hiking as kids get tired very soon.

Travel via Golden Pass to Montreux
Montreux: 4 nights

Travel from Montreux to Lake Maggiore or Lake Como via train (What route or train should be best?)
Lake Como or Lake Maggiore: 4-5 nights Which city and town should we stay in along the lakes with better accommodation / recreational options for family.

Milan: 2 nights (To see Milan in the last two days and fly out of Milan)

Any views on this itinerary? Are there places which you feel I am spending more days than necessary or less? Any other destination I can fit in the middle?

Also, as I asked in my original post. Any possible doable itinerary than can be made with Germany or Austria instead of Northern Italy.

kind regards