I am aware that Russia and France have also produced some famous composers but the most revered and listened to seem to hail from from the Italian states and southern Germany (Vivaldi, Bach, Mozart, Beethoven, Wagner and many others). Is this a coincidence or was this form of art more respected or encouraged in these areas?
Italy is one of the most important focal points of western art and culture; starting from the Renaissance, painters and sculptors from all over Europe came to study in Italian workshops, and Music was no different. From Guido di Arezzo and his invention of the modern music notation in the middle ages all the way to the early modern era, Italy was the undisputed leader in western music; to find out why we might as well ask why the whole Renaissance happened in Italy.
Austria benefitted from geographic proximity to Italy, in addition to the fact that after the Italian wars, the Austrian Empire had a near-continuous foothold on Italy, favoring cultural exchange (Mozart and many other Austro-German artists sojourned in Italy for awhile). Italian artists, including many composers, found employment in the Austrian court, catalyzing local music production.