Assuming you’ll be there in summer, I really liked the Oetz Valley in Austria. It’s a ski area in winter, but a really pleasant valley in summer, with lift-accessed walks in Alpine scenery.  Easy access from Oetztal train station by bus (not included in the pass, but there is a deal with many accommodation providers to give you free transport in the valley + other discounts via the Oetztal Card).

Innsbruck is a nice compact city, if you want to spend a few hours or half a day between trains. It’s more compact than Salzburg, for example.

A third place worth a stop is Kuftstein, very pretty. Two hours between trains should give you a chance to have a look around the town. If you visit the tourist office in the main square, they have a free map to a walking tour around the town - that will take around an hour.

All those are on the logical route from Munich - Austria - Switzerland.

Thank you so much, ​@ralderton , for your thoughtful answer! My main concern now is finding affordable accommodation along this route. I’m on a limited budget, so I’m okay with staying in hostels. Do you know of any smaller towns along the Munich–Austria–Switzerland route that are 30 minutes to an hour by train, where I could stay overnight? My goal is to keep costs low for food and accommodation so I can spend most of my time enjoying train travel. I’ve really developed a fondness for trains lately!

For the full route, I’m considering Munich–Salzburg–Innsbruck–Zurich–Lucerne–Strasbourg over 6/7 days. If you know of any budget-friendly hostels or places to stay overnight, I’d greatly appreciate your suggestions.

I don’t know specifically of any cheap accommodation along that route, sorry. My only advice there would be to minimise your nights in Switzerland, as that’s the most expensive.

What I tend to do is search on Booking.com - or whatever is your preferred website - and switch to the map view. You can then just scroll around the map and find hostels or B&B’s near train stations along your route. I’ve found some great accommodation this way.

A bit off your route, but I can recommend Bogentrakt Hostel in Chur. Very nice hostel, in prison theme. Very affordable, clean, modern and nice staff. Book on their own website for better prices. Off season they sometimes do a discount when you stay multiple nights - you get a guest card as well offering you some discounts and free entries in Chur (handy in pricey Switzerland).

10 minutes walk to the station. But since you developed a fondness of trains, it’s a great place to discover the Rhätische Bahn and the Bernina railway. Very scenic!

Many seasoned interrailers consider this a must do when you like train travel, consider it maybe as a train pilgrimage even

Besides that, look and compare indeed on websites like booking, swisshostels or hostelworld.

no problem. you are right, I need to minimize my night stays in swiss, everything is super expensive. Thanks a lot for the advice. :) 

Thanks for the recommendation but Bogentrakt Hostel in Chur is fully booked during Christmas week. But its a very nice option to consider in the future :)  But Chur seems to be a great place for swiss train adventure. Thanks :)