Geography

The Naruto series is set on fictional terrestrial blue planet called Earth, which includes at least a continent that is divided into a number of different countries.

Countries
Countries operate as separate political entities and are presumably all monarchies, ruled by daimyō who stand as a ruler for the entire country. Hidden Village heads are the generals that take care of shinobi matters. The Naruto world is similar to feudal Japan in many aspects; those countries maintain balance between themselves through nothing but power. Treaties are periodically signed, but they are generally not worth much more than the paper they are written on.

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Hidden Villages
Hidden Villages are parts of countries in which the country's ninja reside. Their heads stand equally with the landlords ruling the countries they are a part of. A Hidden Village maintains its economy by training its citizens to be ninja from a young age and using them as manpower in various missions others would be willing to pay for, from weeding a garden for a single payment to receiving a constant budget from the country it resides in for being soldiers in case the country is involved in a war.