This is a very good question, and it's hard to answer it. As far as I know there is not a universally accepted explanation for this.

The German-speaking world really got their stuff together in that period. We can find great work in many areas done by people from this group, they managed to have money and talent available, there were wars and a lot of change. I leave how all that happened for the people with knowledge in areas other than music.

Now, I want to comment on something relevant, but I can't 100% assure you this is why German composers are more famous these days.

In the early 19th century, the German world was trying to find some form of unity, and they hated the French. Studying the past can get people ammunition for that kind of intellectual war.

Musicology began around that time, it was born in the German speaking world. People started to get organized to study music, and they went to study the great musicians. Beethoven, Mozart and Haydn were the great men, they became the models of the "classical age of music." They studied the masters before them, "baroque" had been used before kind of in a not-so-nice way, but they started using that to categorize the masters from before Mozart's time. Bach's music was revived, and they went on to revive others.

We see efforts to make editions of the Great (German) Masters, concerts to bring their music back (it became fashionable to know about old music).

So, the Germans had some very good musicians and they also created the basis of our concert music culture. They came first with an organized catalog of (great) music, they studied it and created ways to work with it, they played it quite frequently...

They also worked on theory. What most musicians study these days at conservatories and universities comes from the 19th century. The harmony they teach you? Mostly functional harmony, a product of the 19th century German speaking world. Musical analysis? Yep, the more rhetorical approach had been abandoned and the new approach was born out of the forms of the 18th and 19th centuries, with massive influence of the German speaking composers and theorists. Counterpoint? Harmony kind of shaped how counterpoint was studied. Harmony courses included plenty of chorals. Those became the bread and butter of harmony teaching in the German speaking world, those come from the music of Protestant churches. That's pretty much the basis of what you find in most music schools these days, and that has been the case for over a century.

The French went to revive their great older masters, too. Rameau made a huge contribution to harmony, and composed some lovely music, but he had been kind of forgotten because the Italians were doing the fancy music. After his death, Berlioz (a French composer, conductor, and to some extent musicologist) tried to get people's attention to Rameau's music. The French worked harder to revive the music of their great masters after the 1870s, but the Germans had about 4 decades of work by that time.

So. There were fantastic musicians in the German speaking world, and you can look at a hell of a lot of fields and see they did well in many areas. Why? It might have to do with the changes in their educative systems, their economy, and maybe even with the societal norms derived from the Protestant church. But that is kind of speculative and way out of my league.

They were very influential in the study of music, and our modern curriculum has a lot of the stuff Germans created to study the music of their great masters. They also started working in reviving their past before others, that might have given them an advantage. It's not that other places didn't produce great musicians, it might be that they kind of created the basis of the modern music market and they were the first to get into it.

Fancy some French music?

Some harpsichord pieces by François Couperin (pretty damn great, if you ask me)

Some chamber music by Jean-Philippe Rameau

Those two guys were contemporaries of Bach, and kind of the big names in Baroque French music.

François-Joseph Gossec's Te Deum а Grand Orchestre. Contemporary of Haydn, he sounds classical but there's this proto-romantic vibe.

Maybe some Italian? (You are not going to have any problems finding great Italian music, lots of superstars and many are pretty well known these days)

Giovanni Battista Pergolesi's Stabat Mater. Born around the time Bach's children were born. He sadly died at 26 years old, in my opinion one of the most stupidly big loses in music history.

Even if the Germans dominate the canon (which they kind of created), there were lots of talented musicians in other places (including out of Europe).