I’m most likely 100% naive and wrong in this, but it seems like neutral countries just ‘decided’ to be neutral and got a free pass? Please educate me on this. Thanks.
/u/Georgy_K_Zhukov has previously answered Why did Hitler not invade Switzerland?
/u/vonadler has previously answered How were various countries able to stay neutral during WWII? as well as Was Sweden really neutral during WW2?
Not exactly so. For example, countries like Belgium, Denmark, and Norway declared neutrality, but to no avail. Sweden, another neutral country, was more valuable as a non-combatant, else the important iron ore exports to Germany be disturbed.
Switzerland was considered for invasion, in June 1940. Klaus Urner in his book "Let's Swallow Switzerland: Hitler's Plans against the Swiss Confederation" states that on June 16, 1940, Heinz Guderian reached the crossing over the Jura Mountains at Pontarlier, which caused panic and alarm amongst the Switzers.
The Swiss under Guisan had based their plans upon the assumption that the French would protect their left flank along the Jura, but now it became clear that the French forces in Burgundy were destroyed, some of them retreating into Switzerland itself where they were disarmed and interned.
On the 17th (of June) plans were submitted by the General Staff which anticipated sending Guderian straight east to cut off the Swiss troops on the Limmat. The plan estimated that Zurich, Bern, and Lucerne would all be taken by the end of the second day, and that the Swiss Army would be encircled and destroyed before it reached the mountains by the fifth day.
In any event the Swiss never had to face this nightmare scenario for the Germans never implemented their invasion plans. The Swiss were not industrially strong and offered very little in the way of advantages to Germany.
German access to France was much more easily found through Belgium, which also possessed a strong industrial base and afforded Germany useful harbours in close proximity to the British coast, Antwerp was a nest of German U-Boats for the whole war.
Additionally, German communication with Italy was much more easily found over the Brenner in Austria, and the Swiss passes were not needed.
So all in all the Germans had no real need to invade Switzerland, which would have wasted their strength for no corresponding gain. And indeed the Germans found neutral Switzerland useful as a place to hoard assets and to obtain information through agents in contact with the Allies.
The countries that remained neutral throughout the war (Sweden, Switzerland, Spain, Andorra, Liechtenstein, the Vatican etc) were simply 1) not worth the trouble, or 2) more valuable left alone.
Hope that answers your question.