[dufekin]

The Vatican (the successor to the Papal States) came into existence because the Popes of Rome grew quite rich and held much land, occupied by their temporal vassals. The Donation of Sutri in 728 put the Papal States irrevocably on the map; however, the tradition of Papal supremacy over his land holdings dates to the 500s.

The Vatican today, although technically a nation-state, occupies only the Pontifical compound and has no real lay population.

[Clemenza]

Correct. Garibaldi was nice enough to annex the Papal States to the new Italian Republic by 1870. More than half a century later, Mussolini signed a concordat with the Vatican recognizing it as a sovereign state.