During time of war, a country must think of the best interests of their people. Many countries believe that remaining neutral during time of war keeps saves them from the direct line of fire. Some countries have even formally declared their intentions to remain neutral now and in the future.
Countries like Lichtenstein, Finland, Sweden, Switzerland, and Austria have been known to contain a policy to remain neutral. These neutral countries have a theory. Warring countries know, as does the world, that they have a neutral policy. They believe that this will work for them as these countries have assurance that a neutral country will not join the other side. For this reason, the neutral country is not a threat to either side.
This theory is correct for the most part. However, in my opinion remaining neutral, while having some strategic benefits, also has its downsides. Countries need to evaluate each situation independently and apply the appropriate policy. It does not serve the interest of your people to adopt such a broad and unchanging policy that does not adapt to new threats.
You wouldn't want to stand next to someone who was getting pummeled because you might get hit, even if accidentally. However, you can't choose which country you are next to. If some bully is beating up the country next to yours, do you not think that ill effects are going to come your way? Refugees and trade problems are one effect of a neutral policy.
However, many times the war isn't being conducted on a neighbor and the effects are not that immediate. In many situations countries are forced to join alliances before the war comes to them. If some countries are left to wipe out one country after another, it is just a matter of time before they show up on your doorstep. It is too late by that time. The other countries that could have helped in your fight have already been defeated. Defeated by a neutral policy.