My wife and I are planning a month in Italy in January. We have been to Florence, Venice and Rome and picked this time to avoid crowds and experience the "real" Itlay. We plan to start in Bologna and work our way to Sicily by train and buses. I've read very little about Italy in winter besides how to prepare for the weather. I'd like some itinerary suggestions with emphasis on the smaller cities and towns.

There are too many interesting places (BTW: what are you interested in?) between Bologna and Trapani.
You could easily spend the whole month in Southern Italy.
Or would you prefer 2 weeks in Tuscany/Umbria/Latium/Molise (Central Italy) and 2 other weeks in Sicily or Apulia/Basilicata/Calabria?

We enjoy art, nature, food and friendly people. We would like to spend a few days in Bologna eating. Then we would train down to Sienna and some of the small hill towns of Tuscany and Umbria before heading south. We don't know if going down the east or west coast would be more interesting and don't want to run ourselves ragged moving every few days. I realized this is somewhat vague; just trying to field some opinions. Thanks

May be you have a look at http://oldweb.enit.it/comuni.asp?lang=UK and choose the areas and places you want to visit.

If you click on my name you will find our Le Marche and Emilia Romagne trip report and photos for ideas

I would avoid the smaller centres, esp those that rely heavily on seasonal tourism. I suspect half the places in town will be closed - B&Bs, hotels and restaurants especially.

There are so many medium-sized cities of charm, where life does indeed go on year-round: Modena, Mantova, Lucca, Pisa, Cremona -- to name just a few in the north-central regions.

Small hill towns in Tuscany? I really wouldn't, esp if you do not have a car.

I write as one who lived one entire winter in Italy.

I completely agree to stay away from the small Tuscan hill towns at that time of year without a car.