I don't think people overestimate the cultural difference between Finland and Italy for example, they are extremely different.
The language barriers makes Europe much more culturally diverse, but also makes that diversity much harder to discover since you can't fully understand a culture without learning its language.
It is more like the cultural difference between Canada and Mexico, you don't have such a wide spread within USA. You have some parts that is more like Canadians, and some parts more like Mexicans, but Mexico to Canada is still a bigger cultural leap than anything within USA.
I think that the language diversity tends to make it less apparent that people are actually more alike than they seem. I am not claiming that Finns and Italians as a culture are identical other than language, just that the language difference makes them seem more different than they actually are.
The opposite is true in the USA: nearly everyone speaking English to each other, watching the same TV shows, driving the same cars, eating the same breakfast cereals - easy to believe they must all be culturally very similar, when in fact they are not.
We know there are differences within countries, but those differences tend to get exaggerated since you live in them. Even in European countries people tend to say "People from city X are very brash, people from city Y are very warm and welcoming", so they know that even though they consume the same news, speak the same language etc things can be different. Or they say "People from area X are very racist, area Y is very liberal".
But we also know that there are much bigger differences if you cross many national borders and language barriers by going to the other side of Europe, they too will have those micro differences but when going there you also get many major macro differences.
The language barriers makes Europe much more culturally diverse, but also makes that diversity much harder to discover since you can't fully understand a culture without learning its language.
It is more like the cultural difference between Canada and Mexico, you don't have such a wide spread within USA. You have some parts that is more like Canadians, and some parts more like Mexicans, but Mexico to Canada is still a bigger cultural leap than anything within USA.