This is the Medieval town of Sibiu in Romania

Sibiu was named the European Capital Of Culture in 2007, for good reason. It's a beautiful place filled with Medieval and Baroque structures. The city was essentially German but fell back to Romania after WWII.

It's not a very big city and there's really not much going on outside the main center where all the historic structures are. Still, it's close enough to the mountains that you can use it as a base for outdoor excursions.