Inexperienced traveler: move every day or two, or use a home base?

It's mostly a matter of taste. Some people like to be constantly on the move and exploring new areas, while others prefer to have a "home base". It sounds like you belong to the second group.

Some comments on your particular trip and things you mention:

• As MastaBaba noted, finding a hotel or hostel in or near Munich during Oktoberfest will be very difficult if you don't already have one.
• Parking space is not always abundant in Germany, but rarely a big problem. Inner cities tend to be hard to navigate and starved of parking space though, and Neuschwanstein has only one small private parking lot (a goldmine for the owners) that's really near the castle itself.
• You can save a lot on train fares in Germany if you choose the right ticket: the weekend ticket and the Länder ticket offer one-day flat rates for local and regional trains (you can't use the highspeed ICE and IC though).
• Oktoberfest is definitely worth visiting even if you don't like beer; for the sheer size of the crowds, the variety of rides and attractions as well as the general atmosphere. Even if you don't like beer or being around thousands of drunk people, the beer tents are worth a visit - around noon on weekdays they're not yet crammed and you can have lunch in peace.

I can't tell you what you will like best, but you seem to appreciate the differences between the two types of moving around that you mention fairly well. You'll have to make you own decision as to what fits best.

That said, I prefer more of the first. Moving all your stuff to a new ho(s)tel every day is just very tiring.

On a more serious note, I'd be surprises if you, at this time, can still book accommodation in Munich for around the time of this year's Oktoberfest.

In my opinion, the answer to this question depends on a lot of different things:

First of all, it depends how much days you want to spend in the city itself. In Munich, Vienna and Prague there are a lot of things to do in the city itself. In Salzburg I'm not so sure about that, but this is just my personal opninion.

Secondly, it depends on how you want to travel. If you travel by public transport, I can be very annoying to move on every day, because you always have to carry your stuff with you, or find a secure place to store it during the day, then pick it up in the evening or when you're moving on. Most hostels allow you to leave your lagguage there on the day you move on, however, it can be annoying if you always have to go back to the hostel, pick up your stuff and then move on to the next city by train. If you travel by car, this can be a little bit easier because you just can leave your stuff there. On the other hand, this has other disadvantages.

Third, it depends on the things you want to see in the sourroundings of the city and how close they are. If they are easily accessible by public transport, I would vote for staying in the city and then do daytrips to the things you want to see.

In your concrete example, I would stay a few days in Munich. From there you can easily do an excursion to Dachau, because it is easily accessible by public transport in a short time. I did this several times by myself. If you really want to go to Neuschwanstein, I would also do that in a daytrip, because there is nothing more to see there except for the castle itself. Nuremburg however is worth a trip for itself.

Similar things you should consider for the other 3 cities. For example, you can easily do a daytrip from prague to the famous city Kutna Hora.

An just as a sidenote: If you don't like beer, I'm not sure if you will enjoy the Oktoberfest. It is all about drinking beer the whole day, and there are a lot of really drunk people. Even though, there are also some roller coasters and similar things that you might enjoy. However, I would spend there some time so that you have at least seen it ;)