It's my understanding that typically German speakers switch between Standard German, which they might use at work, and some local dialect which they use less formally.
Are there places in Germany where Standard German completely replaced local dialects (So that people no longer switch between dialects depending on the situation)?
Alternatively, are there places where Standard German is the default choice between strangers?
Yes, in large parts of Northern Germany (also well south of Hanover), people nowadays can
This answer assumes a definition of dialect that correlates with geographical code switching. Regional characteristics only become a dialect if native speakers are aware of them in relation to a national standard language as found in the media.
Very probably, no (not with the relatively simple development history you assume - reality is much more complicated). Dialects are really sticky and persistent - And also considered part of the local cultural heritage. They tend to assimilate and adapt, but also tend to stay. They influence pronounciation, grammar, and also choice of words to various extents. Even if dialects are superseded by hochdeutsch, the still tend to have influence to various degrees on some or all of the aspects. "Dialect" vs "Standard German" is not like "black and white" - There are various degrees of in-betweens (I would even consider the rolling "R" (The "Carolin Rrrreiber-R") used by some bavarian dialects even in Standard German as a remnant of dialect).
There are, however, regions within Germany where the local dialect is considered identical to hochdeutsch (for various historical reasons, mainly because the original niederdeutsch "dialect" spoken there would rather be considered a different language and is mainly extinct today - but this is highly disputable) - This area tends to get mainly located in the region around Hannover. Up until the 20th century, the German spoken in Prague was considered to be the "best" Hochdeutsch (but it obviously not superseded a local dialect there, as the local language has always been Czech).
Yes there is one place in Germany where standard German has completely replaced dialects: in books.
(Okay, and mostly in television and in national radio programmes. But the latter would be disputible because TV and radio typically have been using a "standard" variety of the language from their very beginning, so there was nothing to be "replaced".)
Otherwise I find your question is not answerable because it is not clear what one would see as a dialect and what as standard German. There are peculiarities of pronunciation everywhere (even in Hannover where even people with lower levels of formal education tend to speak quite close to written German), and there is no way to define how much you have to deviate in pronunciation, vocabulary, syntax and prosody from "standard German" in order to be considered being a user of "dialect".
The people in Hanover (German: Hannover) are said to speak a very pure Standard German. A local dialect does exist, however it seems that it today almost disappeared.
People will only use Hochdeutsch in speech as soon they realize the other German speaker isn't understanding them properly. It's not related to formal or educated speech. Colleagues at work happily use the local dialect, because they are all speaking and understanding it.
Mostly in big cities, people from different regions meet and so the local dialect isn't understandable to a lot of people. That's where Hochdeutsch is spoken often, and also without trying the local dialect first.
