This was custom and tradition not law so it varied.  Do not wrongly assume that this will be "fact" when searching for your ancestors.   However most couples if they knew who their parents were and were on good terms with them, stuck to this tradition especially in Southern Italy.   People are individuals so you will find couples who were very respectful of their Italian Tradition yet still felt compelled to exercise their own free will.  Therefore, you will find families that followed no specific pattern in naming their children, sometimes naming the children after the patron saint of the day, patron saint of the town or what they felt right to do at the time. 

There are a few standard variations you will encounter in doing Italian Genealogy Name Research.  If the first born or second born child (one given the paternal or maternal grandparent's name) died as an infant or young child, the name of the deceased baby or child was often given to the next newborn.  Another naming variation you will find is that if the first born is a girl, some parents, wanting to show respect and love for the paternal grandfather (and also for good luck) gave the girl a female variation of her paternal grandfather's name such as: 
Angela for Angelo,
Antonia / Antonio,
Benedetta / Benedetto,
Carla / Carlo,
Cristiana / Cristiano,
Donata / Donato,
Enrica / Enrico,
Francesca / Francesco,
Giuseppa / Giuseppe,
Lorenza / Lorenzo,
Luigia / Luigio,
Michelina / Michelino,
Ottavia / Ottavio
Paola / Paolo,
Raffaella / Raffaello,
Vincenza / Vincenzo.
and more...

Other children are frequently named for Patron Saints or relatives.  Almost all Italian Catholic children have a saint's name in their personal litany of given names; which segues into another point.  Many children in Italy are given more than one middle name.  I am not referring to the "confirmation name" given later in life.  Some children are given many names at birth to make all the relatives and saints happy.  My grandmother's full birth name was 'Maria Donata Antonia Caggiano' and when I first sent for her birth and marriage records from Italy they sent me documents on the wrong person as there was another girl born around the same time with the same first 2 names and surname (Maria Donata Caggiano) as my grandmother.  When I sent for the records I did not know my nonna had a third name so I had to send another request in order to obtain my grandmother's birth certificate. 

For more information on given names, surnames and nicknames from Italy go to
the Italian Names page of this site

Italian Names & the History of Names
http://www.anzwers.org/free/italiangen/italynames.html

&
The Italian & Latin Translation page of this site has many links, which will help you in translating and understand Italian Given (first) & Surnames (Last Names), Italian occupation & profession names and other Genealogy Terms.
  If you are not a native speaker you should use many, many references when doing translations as it will help you understand the "gist" of it better

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