Translation:I live in Italy but I work in Germany.
Firstly, as "Niemczech" is the Locative form, let's focus on the Nominative one: "Niemcy". It is worth pointing out that the name of the country is the same as the word for 'the German people'. So "Niemcy to kraj, w którym żyją Niemcy" (Germany is a country where Germans live) is a correct sentence.
The main theory is that the word "Niemcy" comes from the words "niemy" (mute) and "obcy" (foreign, alien). In this way, Niemcy would be therefore 'mute people', because their language was not understandable to the Slavic people, just as they wouldn't understand the Slavs. Another theory is based on the similarity to the words "nie my", meaning literally "not we". As in "These are different people than we are". Finally, some people claim that this word is based on the name of an ancient Celtic tribe called "Nemeti" or "Nemetes".
Well, it's a Slavic loanword.
It has certainly the same origin as немец (a German) in Russian. I've been told that the word is related to some other word that meant 'mute' (and designated someone who didn't speak the local language) and that it was originally a generic word for any foreigner.
I'm curious about the other word. I think that the Polish word for Italy has a similar origin, the same as Wales, Wallachia or Rotwelsch (a language once used among thieves).
because we wouldn't be able to pronounce it otherwise.
- we - before words that start with "w" and "f" followed by a consonant
we Francji, we Włoszech - but w Finlandii, w Warszawie
some other words and some set up phrases.
we mnie (in me)
we śnie (in a dream/sleep)
both w/we środę and w/we czwartek are correct (on Wednesday, on Thursday)
Those few countries with plural names in Polish are a bit more complicated, I think.
For example "Indie -> w Indiach", "Chiny -> w Chinach", "Filipiny -> na Filipinach"
But also "Niemcy -> w Niemczech", "Włochy -> we Włoszech", "Węgry -> na Węgrzech".
"Niemcach", "Włochach", "Węgrach" would be Locative plural forms for "Germans", "Italians", "Hungarians", actually.