There is no separate country within the country of Italy. But there is the city-state called the Vatican--officially it is called the "State of the Vatican City". It's a landlocked and sovereign city-state whose territory consists of a walled off domicile or area within the city of Rome. It was only was given this description/incorporated as such in 1929. The Catholic Pope oversees the Vatican. How Vatican City got surrounded is complicated, but not unique for there is also the Republic of San Marino, home to 30,000 citizens which Italy also completely surrounds. Italy, apparently, is a country that likes countries in its country.