They are a top team, one of the most decorated nations in the world, but it has been up and down for them since this century. They won the EUROs in 2020 (played in 2021), but did not qualify to the last world cup in Qatar, losing the qualifying group to Switzerland and playoff to N. Macedonia. They also failed to qualify for the world cup before that in 2018.
They have lost a lot of players from the past generation and are still rebuilding, Switzerland were more prepared for this tournament.
Italy national team has their habit of up and down and they have tradition of begin a tournament like World Cup, Euro very slowly. This tradition makes their team can be eliminated after a group stage in many past tournaments. And this is saying about their tradition in the past when their national team have many star players at world class level.
Nowadays, recent years, last decade, Italy national team no longer have many star players. The lack of star players, good players and their tradition contribute to make their risk of going home after a group stage bigger and bigger. Italy usually have good team working in big tournament, not like Netherlands that often have internal conflicts but in Euro 2024, team working is not enough for Italy.