When I say German Confederation/EU-like organization for Yugoslavia, what I mean is that you would have many countries (Slovenia, Croatia, Serbia, Bosnia, etc) and "Yugoslavia" would be a mutual agreement between them consisting of things like free movement of people/goods, mutual defense pact, customs union, these kinds of things.
Given the many differences between the peoples of Yugoslavia, I was wondering if anyone thought of not uniting it into a multiethnic country.
I know that after Yugoslavia formation, many parties defended the country be a federation instead of a centralized government, but a federation is still a single country.
Note: I'm a Slovene, so I'm possibly biased.
Centralization vs decentralization was the main political question of Yugoslavia since the very beginning. When I say beginning, I mean pre-war monarchist Yugoslavia.
Serbia pushed for centralization, but Slovenia & Croatia feared such Yugoslavia would be too Serb-dominant, so they wanted to govern themselves as much as possible. Tito's Yugoslavia brought a greater degree of decentralization in the form of a Federal Republic, but it wasn't enough. In 1990, Slovenia proposed a confederation where the central government would only manage military and foreign policy matters, but Milošević's Serbia didn't want to hear about it. This was the final act before Slovenia and Croatia declared independence and the war started.
It's hard to say what was the right path for Yugoslavia. Centralization would likely lead to Serbianisation which would have negative and possibly violent reactions in non-Serbian republics. On the other hand, decentralization would lead to political impotence and deadlock. 1980's Yugoslavia and modern day Bosnia and Herzegovina are good examples of what it might look like.
why did the idea of a single country gather more support?
This is a complicated question. I suggest you read up about the formation of Yugoslavia immediately after WW1.
Yugoslavia wasn't formed like Italy or Germany where a bunch of small kingdoms united into a single nation state. The only Yugoslav state that was independent before WW1 was Serbia (and Montenegro if you want to be pedantic). The winners of WW1 gave Serbia the green light to form Yugoslavia. Other republics didn't really have the army or the political power to oppose this in any way. And besides, nobody really wanted to oppose it. The support FOR unification was pretty high everywhere throughout Yugoslavia, it's just that everyone seemed to have diametrically opposite views of what Yugoslavia was supposed to look like.