"Im Süden von Deutschland" means "in the South of Germany" = within Germany So I could say, "Bayern liegt im Süden von Deutschland" "Bavaria is located in the South of Germany" "Südlich von Deutschland" means "South to Germany" = outside of Germany So, "Italien liegt südlich von Deutschland" "Italy is located to the South of Germany"

What about Im Suden VON?

im Suden means 'in the south' sudlich von means 'south of' London is im Suden (in the south) Germany is sudlich von Denmark (south of Denmark), but that doesn't mean it is in the south of Europe, it's still in the north.