Before I make this argument, please watch Gaijin Goombah's look into Punch Out and the evolution of its supposed racism, as a lot of what he says will lay some of the groundwork of what I'm about to say.
...You back? Okay, let me establish this first. Is Hetalia stereotypical? Yes. It is simply impossible to condense the thoughts, feelings, beliefs, actions, and identities of thousands, even millions of people into one without stereotyping.
And now, hailing back to Gaijin Goomba's argument, he points out that all the characters, and their personalities, are all viewed in a positive light. But Kyra, you may say, they're not portrayed in a positive light. Italy is portrayed as stupid, weak, and incompetent! It's even in the title - "Hetare" (or idiot) Italia! To that I say, have you forgotten the other ways Italy is portrayed? Italy is portrayed as cute, kind-hearted, caring, lovable, a great chef, a great lover, the list goes on. You see, what Italy is really portrayed as is a full personality - including weaknesses, strengths, likes, dislikes, desires, the list goes on. This goes for all countries - America is strong, but can be obnoxious, Japan is calm, but he has difficulty expressing emotion, England is a terrible cook, but he never gives up - the list goes on. Each character is given a full personality, something we can relate to and care about, which results in us all loving each personality, and each country, for who they are.
So, what leads us to love each country? I invite you to watch this video, paying attention to the pictures, song used, and, indeed, languages it's in. What do you see when you watch that video? You see the characters and, indeed, the characters caring for one another. And that's the thing - the characters in Hetalia may poke fun at one another, but it's shown time and time again that when things get bad, they truly, deeply care for one another, despite their flaws. It also shows them being genuinely interested in one another's culture.
And in that, it shows all the greatest parts of humanity. On an individual level, it brings out the parts of us who are willing to love and accept one another, despite our flaws. It shows a world in which we can be ourselves without fear of being discriminated against.
On a global level, it shows countries who are willing to help one another in crisis. It shows how we can make global decisions without the need for war. And it especially shows how wonderfully diverse the cultures of the world are, and how we can all come to appreciate, love, and understand each culture, with both its strengths and its weaknesses.
Like I said, Hetalia expresses all the great things about humanity. There's a reason that it often mentions the idea of the world - it not only emphasizes the each individual country and it's culture, but how each country's culture creates an integral part of this world. In the end, what Hetalia is about how that, yes, there are negative things about this world and, indeed, about each country's different cultures, but, thanks to each country and culture's diversity and the appreciation for each other's country and culture, this world is truly a beautiful world.