Western Europe is very different from Eastern Europe in this case.
In Western Europe, low-cost flights and buses essentially won the market.
But there are not as many direct flights between Central and Eastern European cities, and the roads are often not that good, either.
Therefore, in any direction from Budapest overnight trains are still very popular, and in countries like Ukraine it's probably the single most important way to travel long distances.
The overnight trains in Central and Eastern Europe are much cheaper, too. For instance, a seat in Budapest - Belgrad costs 15€, and a bed in Kiev - Lviv starts at around 8€.
The rise of Wizzair is reducing the appeal of long-distance train travel in Central and Eastern Europe. You can now fly from Budapest to certain destinations in surrounding countries for equal to or less than the price of the train if you book early or have little luggage.
Also, the launch of Polski Bus (a localized Megacoach) a few years ago means you can get between Poland and various Central European destinations for as little as 5€, again cheaper than the train.
And the national train operators are being challenged on their own turf by open-access operators. The days of sleepers are probably numbered in this part of the Europe. Wagons with convertible benches are uncomfortable both for sitting and sleeping. They're utterly uncompetitive vis-a-vis reclinable seats deployed by operators like Leo Express. Perhaps one day they'll start putting lie-flat recliners used in airliners on trains one day. That's more economical--and flexible--than having separate rooms.
The airlines have basically put trains out of business in Western Europe. Currently you cannot get from one end of Denmark to the other for a morning meeting by train.
Last time I checked the only way to have a 9:00 meeting in the center of Copenhagen, leaving from Aalborg (400km away) is by leaving at 23:00 the day before. It's a 6.5 hour train ride. Flying is 20 minutes and you have multiple departures and airlines every morning (granted you have to be at the airport 20 minute early and it a 30 min trip for the airport to the center of Copenhagen).
When people talk about how great trains are in Europe, I assume they never had to used them. Trains absolutely suck, they aren't fast enough, not frequent enough and they are expensive. It cheaper and faster to fly or drive.
> When people talk about how great trains are in Europe
When people generalize across Europe, which you've just done, it should often be ignored. They tend to pick the best or worst examples.
Denmark (and Greece) have the least favourable geography for land transport. That favours flying, but doesn't mean flying from Nuremburg to Berlin is necessarily the best option.
> Denmark (and Greece) have the least favourable geography for land transport.
Norway would like a word with you there. Denmark’s got a lot of annoying coastline but at least it’s flat, small and relatively densely populated. One of the things I miss most here on the Norwegian west coast is the lack of useful rail connections.
Never try to travel with a train in Romania. The infrastructure is totally wrecked. Trains are always late, even when weather is perfect, but if you're coming during summer you'll be late because "the rails are too hot" and in winter you're late because of the cold. It's a shame - we've reached the level where the average speed for trains is around 30km/h, lower than 50 years ago. Also, the trains are dirty and people inconsiderate of anyone else but their companions.
At the same time, I was delighted to travel with trains in Czech Republic when I lived there for one year. Not sure about other Eastern European countries.
In Western Europe, low-cost flights and buses essentially won the market.
But there are not as many direct flights between Central and Eastern European cities, and the roads are often not that good, either.
Therefore, in any direction from Budapest overnight trains are still very popular, and in countries like Ukraine it's probably the single most important way to travel long distances.
The overnight trains in Central and Eastern Europe are much cheaper, too. For instance, a seat in Budapest - Belgrad costs 15€, and a bed in Kiev - Lviv starts at around 8€.