vatican--a city state?

Found this from Kavinay Kishor, Roman Catholic catechized as an adult. "A way to to understand this is that the papal state system is a tradition from feudal times. The Catholic Church has always asserted political sovereignty by it's claim to land and statehood itself. The Pope and The Holy See (Church Government) itself may have been physically located in Italy, but were respectively a head of state and sovereign power independent of Italy. This is because the Pope was not the subordinate of another feudal monarch. Yet, in a feudal system, the only way to assert sovereignty was by means of maintaining of your own distinct kingdom. The Pope and the Catholic Church were never part of the Italian nation-state, but rather always operated their own state and even police and army since the middle ages. In fact, the The Pope was considered the ruler of an area called the Papal States until 1870 when Italy declared war and seized Rome. It was only in 1929 when the Italian State and the Papacy came to an agreement that conferred Vatican City back to the Church. The Vatican is thus a state in keeping with The Holy See's consistent claim to sovereignty. It is also why Vatican City is administered by The Holy See and why the Pope is treated as a head of state during a papal visit to another country." Also found this: The Catholic Church desires the maintenance of this state so that no nation may claim the pope for its own and thus attempt to influence or control the Church via political means.
http://en.wikipedia.org/wiki/Papal_States
 gives a history of the papal states