First a little bit of history: Swiss neutrality was first declared in 1516 after suffering a decisive defeat at the hands of king Francis I of France the previous year at Marignano, in northern Italy.

From then on the Swiss Confederation agreedto a perpetual peace with France, starting the principle of neutrality. In the centuries after the split between Protestants and Catholics inside the country made it impossible to decide which party to support in the religious wars, so Switzerland remained neutral even there and by that point the idea of neutrality started to become a guiding principle of the state, as proven by the decision in 1647 to create a common army for the preservation of neutrality and the declaration of independence in 1648.

Swiss neutrality was broken in 1798 with the french invasion of switzerland and the creation of an allied puppet state that lasted for the whole napoleonic period. After the congress of Vienna modern switzerland was born and the treaty affirmed the inciolability of swiss territory and its neutrality.

In 1907 the Aja convention declared the rights and duties of neutral countries and switzerland became one of them, alternating between partial neutrality (such as when it joined the society of nations and agreed to partecipate in economic sanctions) and complete neutrality (from 1938 to 2002 when it joined the UN).

So what are the reasons switzerland maintained neutrality so well:

• Geography and army: Switzerland is a mountanious land with a long history of citizens-soldiers that to this day mantains mandatory military service and has a very powerful army. Invading switzerland would be like invading Afganistan but armed with modern MBT tanks and planes. Moreover switzerland is not a rich land in terms of natural resources, so the invasion would not be very profitable. The only reason to invade is to cut short the road from france to Austria that was the reason for the french invasion.
• Commitment to neutrality: Switzerland always showed a strong commitment to neutrality, during the franco-prussian war switzerland interned a routing french army under the condition that all weapons would be abandoned at the border and soldiers showimng both commitment to neutrality and humanitarian values. The same happened with ww2 pilot shot down over switzerland.
• International law: switzerland always applied all the laws concerning rights and duties of neutral countries, thus giving no reason to invade to nearby countries fearing swiss partiality. Moreover Switzerland promoted his image as a nautral country by hosting several international organisation (such as the red cross) and offering their country as a meeting place for hostile countries to sign peaces or other treaties and offering support in promoting peace in several areas such as Korea, the Balkans, etc...