Italy was playing world cup qualifiers terribly, they were unable to win most games, achieving only boring ties against considered weak teams such as Northern Ireland and Bulgaria. And even though Switzerland isn't a weak team, Italy should have been superior to them, but they were unable to do it as well, staying in second position in group C. Considering it, Portugal seems to have some advantage over them.
However, at same time, Italy has played Eurocopa 2021 brightly and that is a very strong factor at their favour. I could even believe Italy has totally focused their effort and energy in Eurocopa until now and since it's over, they can fully concentrate their skills in world cup from this phase on.
Italy really got surprising results in the World Cup Qualifiers. But they are still a very strong team. And as we are talking about the chance to join the World Cup now, I expect them to improve their performance a lot compared to before. They would eliminate North Macedonia easily. But let's say that they have a matchup against Portugal in the final round of the playoffs, then things are going to get really interesting. But I still believe in Italy to advance.