The origins of Swiss neutrality are twofold:
The defeat of the Swiss by France in 1515 at the Battle of Marignano ended Swiss territorial ambitions, not just in Italy but in general. In the next decade, combined-arms armies would defeat Swiss mercenary formations (most notably at Bicocca in 1522), further undermining any support in Switzerland for offensive action.
At the same time, the Cantons were dealing with internal strife related to the Reformation.
Switzerland was invaded by the French in 1798, but after the final defeat of Napoleon, the Treaty of Paris established Swiss neutrality in perpetuity. It was able to maintain this during WW1 despite sharing borders with both Allied and Central Power states, and its neutrality was recognized again in 1920 by the League of Nations.
During WW2, Switzerland was completely surrounded by Axis powers and was aware of a plan by Hitler to invade and conquer them. In the end, this was not done, because Switzerland is an eminently defensible country of limited strategic value.