But yes, if a party wins with 49% of the vote, they don't have a majority, so giving them a majority is undemocratic. They should have to form a coalition or cooperate with another party to govern.
I think it's quite undemocratic to force parties supported by a very large plurality of the electorate to co-operate and make concessions to fringe parties in order to get a majority. Why should a party with 3% of the vote have the same power as a party supported by 30% or more? We'll still have big parties left out in the cold of opposition. The only beneficiaries here are the fringe.
The people
do choose the local candidate. For one thing, you're marking a ballot with that person's name on it. Moreover, if you're just voting for the party, you can join that party very easily and nominate anyone you like. Even longtime party members won't have a say in choosing the list members -- that will be done purely from the party's leader's office.
Oh, and Germany and Italy aren't such great models. Germany has a higher percentage requirement for a party to enter the Bundestag, so it's harder for fringe parties than it would be in Ontario. Even so, their system allows the ex-Communists into the Bundestag and neo-Nazis into the state legislatures. I can't quite see how that's a good thing. In Italy, politics are a mess, and they're even worse than they were in the past when at least the Christian Democrats had a unifying role. Now, elections are contests between vast and unwieldy coalitions of tiny parties, many of which are based around the personality of one leader. As you might imagine, people who decide to create parties around themselves have rather large egos, and they hold the government hostage for every single decision. Urgent reform is almost impossible in Italy. For example, cracking down on crime is extremely difficult because many of the small parties have been penetrated by criminal elements, and they threaten to leave the coalitions and bring down the government if any tough laws are passed. Same goes for labour reform, tax reform, etc. etc.