The Schengen Agreement is an agreement between twenty-five European countries that comprises the Schengen Area. This area operates very much like a single state for international travel with border controls for those travelling in and out of the area, but with no internal border controls.
The Schengen rules were absorbed into European Union law by the Amsterdam Treaty in 1999, although the area officially includes three non-EU member states—Iceland, Norway, Switzerland—and de facto includes three European micro-states—Monaco, San Marino, and the Vatican. All but two EU member states—Ireland and the United Kingdom—are required to implement Schengen and, with the exceptions of Bulgaria, Cyprus, and Romania, have already done so.
Implementing the Schengen rules involves eliminating border controls with other Schengen members while simultaneously strengthening border controls with non-member states.
The Schengeen Area makes life easier for overlanders touring Europe. Controls on border crossings are very rare within the area, and often just a sign marks a boundary between two states.
Usually papers are not needed to be shown, but if there is some kind of control, whether a passport or an EU approved national identity card is required depends on national rules and varies between countries.