I'd not seen it before on the leather Fiats, but I did a Google search for leather+wears+off+steering+wheel and it looks like there have been many people having the problem with all kinds of cars.
I do remember the vinyl wearing off on the shift boot and the shifter knob in an old Datsun pickup. It baked in the sun, in a hot area, so I assumed it was from heat/sun and long-term wear.
Did the whole thing just crumble off all at one time? Or has it been chipping, rubbing, or scraping off over time?