Vatican City is an independent state located within the city of Rome. With an area of 44 hectares (110 acres), and a population of about 1,000, it is the smallest state in the world by both area and population. However, formally it is not sovereign, with sovereignty being held by the Holy See.
It is an ecclesiastical or sacerdotal-monarchical state (a type of theocracy) ruled by the Bishop of Rome – the Pope. The highest state functionaries are all Catholic clergy of various national origins. Since the return of the popes from Avignon in 1377, they have generally resided at the Apostolic Palace within what is now Vatican City, although at times residing instead at the Quirinal Palace in Rome or elsewhere.
Vatican City is distinct from the Holy See (Latin: Sancta Sedes), [g] which dates back to early Christianity and is the main episcopal see of 1.2 billion Latin and Eastern Catholic adherents around the globe. The independent city-state, on the other hand, came into existence in 1929 by the Lateran Treaty between the Holy See and Italy, which spoke of it as a new creation, not as a vestige of the much larger Papal States (756-1870 ), which had previously encompassed much of central Italy. According to the terms of the treaty, the Holy See has “full ownership, exclusive dominion, and sovereign authority and jurisdiction” over the city-state.
Within Vatican City are religious and cultural sites such as St. Peter’s Basilica, the Sistine Chapel and the Vatican Museums. They feature some of the world’s most famous paintings and sculptures. The unique economy of Vatican City is supported financially by the sale of postage stamps and tourist mementos, fees for admission to museums, and the sale of publications.
The name Vatican city was first used in the Lateran Treaty, signed on 11 February 1929, which established the modern city-state. The name is taken from Vatican Hill, the geographic location of the state. “Vatican” is derived from the name of an Etruscan settlement, Vatican or Vaticum meaning garden, located in the general area of the Romans called vaticanus ager, “Vatican territory” .
The official Italian name of the city is Città del Vaticano or, more formally, Stato della Città del Vaticano, meaning “Vatican City State”. Although the Holy See (which is distinct from the Vatican City) and the Catholic Church use Ecclesiastical Latin in official documents, the Vatican City uses officially Italian. The Latin name is Status Civitatis Vaticanæ; this is used in official documents by not just the Holy See, but in most official Church and Papal documents.
The name “Vatican” was already used in the time of the Roman Republic for a marshy area on the west bank of the Tiber across from the city of Rome. Under the Roman Empire, many villas were constructed there, after Agrippina the Elder (14 BC – 18 October AD 33) drained the area and laid out its gardens in the early 1st century AD. In AD 40, her son, Emperor Caligula (31 August AD 12-24 January AD 41; R. 37-41) built in her gardens a circus for charioteers (AD 40) that was later completed by Nero, the Circus Gaii et Neronis ,  usually called, simply, the Circus of Nero.
Even before the arrival of Christianity, it is supposed that this was uninhabited part of Rome (the ager vaticanus) had been considered sacred, at least not available for habitation. [Citation needed] A shrine dedicated to the Phrygian goddess Cybele and her consort Attis remained active long after the Constantinian Basilica of St. Peter was built nearby.
The particularly low quality of Vatican water, even after the reclamation of the area, was commented on by poet Martial (40 – between 102 and 104 AD). Tacitus wrote, that in AD 69, the Year of the Four Emperors, when the northern army that brought Vitellius to power arrived in Rome, “a large proportion camped in the unhealthy districts of the Vatican, which resulted in many deaths among the common soldiery ; and the Tiber being close by, the inability of the Gauls and Germans to bear the heat and the consequent greed with which they drank from the stream weakened their bodies, which were already an easy prey to disease “.
The Vatican Obelisk was originally taken by Caligula from Heliopolis in Egypt to decorate the spina of his circus and is thus its last visible remnant. This area became the site of martyrdom of many Christians after the Great Fire of Rome in AD 64. Ancient tradition holds that it was in this circus that Saint Peter was crucified upside-down.
Opposite the circus was a cemetery separated by the Via Cornelia. Funeral monuments and mausoleums and small tombs as well as altars to pagan gods of all kinds of polytheistic religions were constructed lasting before the construction of the Constantinian Basilica of St. Peter’s in the first half of the 4th century. Remains of this ancient necropolis were brought to light sporadically during renovations by various popes throughout the centuries, increasing in frequency during the Renaissance until it was systematically excavated by orders of Pope Pius XII from 1939 to 1941. The Constantinian basilica was built in 326 over what was believed to be the tomb of Saint Peter, buried in that cemetery.
From then on, the area became more populated in connection with activity at the basilica. A palace was constructed nearby as early as the 5th century during the pontificate of Pope Symmachus (reigned 498-514).