Of course it is in Italy. It is a little town perched above Taormina and we accidentally went to see it when we were traveling in Sicily. I thought we were going to the outlook in Taormina but instead the taxi driver took us to the town that looks out over Taormina.
The town above Taormina is called Castel Mole.
I am not sure who votes in the competition but it seems like there are endless beautiful towns all over Italy.
If you are planning a trip to this area, I recommend a local car service. They also do airport transfers. I found them when I wanted a ride from Taormina to Catania. 100 euro for a van. Divided up by a group, the price was about the same as the train plus taxi. But door to door.