Its hard to answer a question like "what was life like" because it differs for every individual. But generally speaking Italy remained poor compared to its Western European counterparts or its axis counterparts and Mussolini never really did much to actually help the situation. For example in 1938, Italy's GDP was 140.8 billion, compared to Germany's 351.4 and Japan's 169.4 billion. The UK's GDP was 284.2 billion and France's was 185.6 billion. Per capita numbers also tell a similar story. Uk stands at 5,983, France at 4,424, Germany at 5,126, and Italy at 3,244.

So Italy definitely was not any sort of economic powerhouse. Italy's economy was hurt further during the war because they were restricted into the axis and there trade, which the Italian economy needed, was severely reduced. In terms of other economic matters, Mussolini's regime had to deal with the great depression and just in general Italy's unfavourable economic situation. He introduced the "battle for grain" in 1925 which tried to make Italy self sufficient in food, while it did lower grain imports, it also caused people to move away from crops that made money thus leading to many farmers and land owners becoming unemployed and moving into the cities. The "battle for births" which was Mussolini's attempt to increase the Italian population also failed. The population increased due to increasing medical care, but the actual birth rate did not see significant improvment.

In terms of industrial workers, they were guaranteed a set of rights under Mussolini's "labor" charter, and it guaranteed a number of rights to workers as well as setting up labor courts to handle disputes. The charter should have been a step forward for industrial workers but it was essentially a way for Mussolini to distract the workers from the fact that he was actually taking their rights away from them and as a way him to boast that he was a man of the people. The Italian fascist labor ministry under a former socialist Edmondo Rossoni, had tried to actually further worker's rights, but Mussolini ended up siding with the corporations and in any dispute was sure to favour the bosses and industrialists. With the onset of the great depression Mussolini did do some things to help Italians, such as expanding health benefits, maternity benefits, things of that nature to ease the burden on regular Italians.

In terms of what you could do for fun; well the fascists had little control over cinema and theatre as both were run by private industries and the fascists didn't want to interfere. But they did encourage people to go see movies and plays, theatres and cinemas had been expensive, but at fascist urging discounts were given on tickets and the general public could actually afford to see films and productions. The fascists also encouraged nature and outdoor activities, they made Italy's famous natural beauties like mountains, beaches, etc. into tourist areas that people could go visit on the weekends or whenever they had time. Marches, parades, tours were also popular. Radio was also popular, the Fascists, like the Nazis, encouraged radio production and usage to make use of the new medium.

With the onset of WWII, everything kinda went south. The Italian economy was heavily dependent on Germany, especially for things like Coal. Italy's military, lacking in both competent officers and economic support, went from defeat to defeat as Britain swallowed up their meagre colonies in Africa. With the entry of the USA not the war, large scale bombing on Italian cities began. Mussolini, in typical pompous fashion, had figured that anti-aircraft guns were not necessary for cities and he only station the few anti-aircraft units he had in ports and airfields. This meant allied aircraft could bomb at will any Italian cities. Food started to become scarce. In 1941 Italians were allotted just over 1000 calories a day , and in 1942 it dropped to below 1000. Italians began to blame Mussolini and his government. The problems began to emerge and in response Mussolini resorted to a propaganda blitz trying to portray the Americans and British as "gangsters" who were terrorizing Italian cities. Of course the problem with this is that many Italians loved the USA, especially in the South, where many had close family in the United States. And thus the propaganda failed and in response to a growing threat Mussolini's own fascist grand council (a supposed advisory body) working together with the King, overthrew Mussolini.

In terms of just how fascist Mussolini was? Well he was the first actual fascist leader to seize power so he gets that distinction. Really he shared many similarities with his quasi-fascist dictator friend Hitler (he actually hated Hitler). The ideologies of Fascism and National Socialism shared much in common, hatred of liberal parliamentarian democracy, a drive for expansion based of historical heritage. In Hitler's case his idea of Lebensraum as well as a Greater German Reich; Mussolini's equivalent was "Vital Space" which in the short term meant former Italian territories that had either been striped from Italy in previous centuries or just contained Italians. In the long term it meant any territory that Fascist Italy felt it needed to remain a dominant power.

Where the two differ, and what would actually be a significant fight between the two, was over the issue of race. Mussolini never prosecuted Jews or other races to the extent Hitler did. Mussolini did enact some laws against the Jews when Hitler insisted, but he never agreed (until he became a puppet ruler in 1943) to actually deport the Jews to concentration camps. Mussolini never believed in the idea of a "master race" and in general he thought Hitler's racial ramblings were utterly stupid. Mussolini also never opposed organized religion and the catholic church in the way Hitler did, indeed Mussolini made several concessions to the Papacy.

Sources:

The Fall of Mussolini, Italy, Italians, and the Second World War by Philip Morgan

Nazi Germany and Fascist Italy "Fascist Style of Rule" by Alexander De Grand

Economics of World War 2 edited by Mark Harrison

Mussolini by R.J.B. Bosworth

Mussolini by Dennis Mack Smith

Fascist Ideology by Aristotle Kallis

Mussolini and the Rise of Fascism by Donald Sassoon

Mussolini unleashed 1939-1941 by MacGregor Knox

Wow! It seems like I'm late to the discussion, but anyway... I should probably clarify that this post mainly deals with life in mainland Italy under Fascist rule; if you want to know what life in the colonies was like, see here.

To begin with - the shortages of many kind of goods such as coffee, chocolate and various types of raw materials due to the League of Nations' embargo of 1936, certainly had an impact on our average Italian's lifestyle. More 'autharkic' ubstitutes (such as Italrayon, orbace - a Sardinian tissue - instead of wool, chicory juice in the place of coffee, etc., etc.) of all those things we had to import were not the best, but the only things available; many Italians had to make do with what they got well before the war, and the subsequent rationing only made things worse.

A new, harsher Penal Code was implemented in 1931 which re-introduced capital punishment in our country (something that had been abolished in 1889) and its Civil counterpart published in 1942: both Codes are still in force, albeit expurgated of their 'Fascist' content and with many modifications. Homosexuality was not tolerated as well, despite having it been decriminalised with the Penal Code of 1889; suspect homosexuals were often charged acting on anonymous denunciations then trialled, fined and sent 'into exile' (al confino) in one of the many penal colonies located in the remote islands of the Tyrrhenian - the same way most other dissidents were dealt with.

It should also be mentioned that the Fascist regime did in fact try to forcibly Italianise (by forbidding the use of these people's languages also via beatings) large swaths of the South-Tyrolean and Croatian/Slovenian populations living in those lands - which were also home to sizeable ethnic Italian communities - that had been incorporated after WW1. In turn, some of them organised anti-Italian resistance movements which were suppressed by the Fascist authorities; this would later cause quite a few problems both during and after the war, as it would ultimately lead to the expulsion of some 300,000 ethnic Italians from the now-Yugoslav Istria and Dalmatia... 5000 of whom would have been brutally murdered between 1944 and 1949 during what are known as the foibe killings (these are a kind of karst sinkhole common to Istria, in which the bodies of the victims - or sometimes even the victims themselves, when still alive - were uncerimoniously dumped).

When the Racial Laws came to be in 1938, Jews were forbidden from being employed in the public administration, the schools, the Army, the Fascist Party (!) and the like; 'Aryan' families could also not have a Jew at their service, and their businesses had to be made clearly recognisable by means of a sticker reading "This is an Aryan business". These laws also forbade 'miscigenation' between the Italian colonists and the so-called Camitic natives but their application in the colonies proved to be problematic; interestingly, while these were abolished by the new Italian government in 1944, the Allies kept them in force throughout Libya until 1947.

In some way Fascist Italy was an awkward contrast of old and new, progress and tyranny, innovation and inefficiency, luxury and poverty. Majestic ocean liners brought poor families in search of a better life; a backwards Army paled in front of a relatively modern Navy; shanty medieval neighbourhoods were razed in order to make space for bombastic avenues and government palaces; railways were extensively modernised and partially electrified, yet the road network wasn't cared for to the same degree; airports and air bases were built, but the Air Force could have been considered obsolete by 1940; early TVs co-existed with the lack of radar... and so on and on and on and on.

I don't think anybody mentioned the fact that both the INAIL, Italy's agency for the safety on the workplace, and INPS, the country's national social security agency, were actually creations of the Fascist government: this might at least in part explain the reason as to why so many elder people seem not to condemn the regime as thoroghly as one would expect. The school system was also reformed twice, in 1923 and 1940, and Italy's middle schools as we know them are in fact a product of the regime (more precisely, these were created by Giuseppe Bottai, who was Minister for Education at the time).

Speaking about Rome and its environs, large swaths of the city's centro storico were bulldozed in order to make way for new boulevards and avenues; an entire district was bulldozed and the Fora separated when via dell'impero was built in 1932, most of the ward of Borgo had been torn down so that the large boulevard connecting the city with St. Peter's was begun; countless new government buildings (post offices, hospitals, schools, council houses) were done and an entirely new district - the E42, which should have been the showcase for that year's World Fair - built in the outskirts; line B of the Metro was begun. In Southern Latium, the marshes were reclaimed with the help of 'settlers' from Northern Italy, and quite a few model towns (such as Aprilia, Pomezia, Littoria) were founded.

As far as the media were concerned, censorship was obviously a factor to consider when creating a new production. But Mussolini himself was both an expert communicator and keen cinema enthusiast, and his policies reflected this: soon a national industry was born, new studios were built (Cinecittà, 1937) and dubbing made mandatory... not just because of awkward nationalist policies (such as the italianisation of foreign loanwords and actors' names), but also because a significant portion of the population was objectively illiterate and couldn't have read the subtitles.

But Italy had also experimented with an early type of television - or, better, radiovision, as it was known back then. It made its first debut on 4 June 1939; its programmes were produced by the EIAR (the State agency tasked with radio broadcasts) and obviously only available to the happy few belonging to the party cadres and the richer strata. Pre-existing structures were adapted for TV broadcasting, a few ones were created from scratch and most, if not all, of the programming was done live with an early variant of analog broadcasting; there was little recording going on and this also why almost nothing has survived to this day. TV service was hastily suspended after the country's entry in WW2 and the few archives were either scattered or lost during the war.

My source here is Diego Verdegiglio's La TV di Mussolini.

• This is one of the few surviving early TV sets.

• Here's an interesting slideshow (requires Silverlight!).

• Here, here, here, here and here are some rare photos.

As someone who also knows very little about Mussolini's Italy, I think I know what OP's trying to ask:

What were some of the general limitations Mussolini's regime placed on the common populace? What were some of the hush-hush cruelties exacted on the victims of his regime, and who were they? Was it a difficult time and place to live comfortably?

Can someone please discuss the black telephone vs white telephone disparity in their reality vs movies.