For Italy it's definitely taking away all his bubbly happiness, cluelessness and other such traits and replacing them with cold calculation so that he has no problem stabbing Romano in the stomach and watching him bleed to death after pretending he just wanted to hug him. While there's certainly plenty of history that would require a darker and more mature take on Italy (and we know he beat up Turkey, so there's canon support, too), there are some lines that you have to cross very carefully if you don't want to make him totally OOC.
Re: How do people "improve" the characters?