Vatican City is a country inside a city.
Why it is true
With only about 0.49 km², Vatican City is the smallest independent country on the planet. The curious fact is that it is entirely located within Rome, the capital of Italy, forming a country completely surrounded by a single city.
Source: Geography
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This is the reading side of the site, so the answer is in the sentence above — that is the whole point of it. Test yourself works the other way round: the question comes on its own, and the fact and the explanation only appear once you have answered.