No Stupid Questions

For other examples of countries-in-countries, we can look to Switzerland, Germany, and the USA. A casual observation of all three are that their first-level political subdivision is known as a "state" and not "province" or "territory".

Swiss history -- which I admit I'm not that clear on -- shows that the modern sovereign state formed as a loose confederation of smaller kingdoms unifying together. Indeed, the foundational document of the modern Swiss Confederation in 1848 directly drew inspiration from the USA Constitution of 1789. However, they made some modifications, such as having a 7-person Federal Council, which together fulfill the role akin to the American President. That is, the role of Head of State and also Head of Government (aka a Prime Minister). This style of executive governance hews more closely to the rich Swiss traditional of direct democracy, rather than that of a purely representative republic.

Germany, specifically the successor state of West Germany post-WW2, and then the unified state of Germany post reunification, is a federal republic. A republic to restore the functions of the earlier Weimar Republic, and a federation of states because of USA influence in drafting the Basic Law -- Germany's Constitution -- following WW2. But unlike the USA federal system, the German system would mimic the parliamentary system of Westminster, being that of the United Kingdom. So while governmental power is distributed amongst the several states and the federation, the governance would be through indirect election of the Prime Minister. The idea is that by dividing power this way, no mustached fellow with fascist ideas could take control of the organs of power again.

Finally, examining the oldest continually-operating example, the USA currently is composed of a strong federal entity and 50 US States that wield all remaining power not reserved to the federal government. But initially, this is not what the American Founding Fathers had in mind at all. The late 1700s envisioned the original 13 colonies of the early United States of America to be independent countries that confederated for common causes, like defense and foreign policy. The precursor to the US Constitution -- the Articles of Confederation (1777) -- tried this, but problems quickly arose because each State had their own currency, debt levels, legal systems, and often undermined each other to advance their own position, such as favoring in-state citizens in lawsuits filed by out-of-state citizens. This made trade difficult and the federal government had little power to do anything about this.

Even with the revised US Constitution document, the whole weak federal government thing continued until the 1860s during the American Civil War, with the aftermath being a federal government that fully asserted its powers under the US Constitution. Any notion of US States being country-like would have fully evaporated by then, especially during Reconstruction when the Guarantee Clause was used to install military governance in the defeated southern states until reintegration into the Union. Such a thing would be impossible for a modern country/sovereign state.

Fun fact: the Guarantee Clause is why a US State cannot convert itself into a hereditary monarchy. The Constitution does not allow for a Monarchy of South Carolina, and we're probably all better off for it anyway. Although if the role was an elected position -- like with the Co-Prince of Andorra -- then that might be permissible.

To that end, the modern US State is still a sovereign entity, in that certain things are wholly within their domain and not of the federal government's. But US States are still beholden to the US Constitution, use the same money as the Union, and must honor interstate commerce and contracts from in- and out-of-state, as well as judicial rulings from the federal court system. But this dual sovereignty system post 1860s continues to evolve, with some states encroaching on federal authority, such as with border control.

Aspects of these three example countries find their way into most of the modern governments of Western countries, so hopefully this was a useful explainer.