We love our "Italian" food here in San Fransico. Only like with the majority of the US, American "Italian" food is a concept that didn't exist until the last 150 years or so.
The cuisines of Italy are incredibly diverse and intensely regional due to Italy's divided history, even today.
Italian-American cuisine is a different story.
The great waves of Italian immigrants to the Americas in the late 19th and early 20th century came mostly from Southern Italy, especially Naples.
It was the staples of Southern Italian cuisines that formed the basis of Italian American cuisine. That's why when Americans think Italian they think tomato sauce, for the most part --- because that is a common staple of southern Italian cuisines.
Italian American cuisine tends, however, to be much richer than Neopolitan, because meat and cheese and sugar were much more affordable in the states than back in the old country.
The dishes that most Americans think of as Italian food --- spaghetti with meatballs, lasagne, veal parmesean --- they begin to be developed by the early 1900s, and if you were in a city with a big Italian population, you could go out to a Italian restaurant and have your fill of them.
Such a restaurant would have been consiered more "exotic" than "fancy", though --- most Americans would still have been unfamiliar with Italian food.
It's only post WWII that that starts to change --- GIs who had served in Italy came back with a taste for pizza and pasta, and the rise of convenience and fast foods helped popularize Italian American food more broadly.
By the 1960s, it was commonplace for towns across the country to have an Italian restaurant, a take out pizza place, a sub shop.
So by the 1960s Italian American food is popular, but it's not considered high-end, and Americans are pretty limited in what they'll try.
That only changed in the 1970s and 1980s.
The classic French haut cuisine that was considered the epitome of fanciness though the mid-20th century ephmasized highly processed ingredients, lots of heavy sauces, lots of meat. By the 1970s, though a new generation of chefs broke away from this. The "nouvelle cuisine" in France and California cuisine in America instead emphasized seasonal ingredients, simpler preparations, more vegetables.
The success of these movements in turn inspired a rediscovery of Italian regional cuisines among high end chefs. Instead of red sauce and melted cheese, think olive oil and balsamic vinegar. Pasta primavera was invented, Tuscan cuisine is popularized, and people go mad for polenta and risotto, both Northern Italian dishes.
That's when "Italian food" becomes fancy food --- when the idealization of using local, seasonal ingredients simply prepared helped spur the rediscovery of Italian regional cuisine among chefs.