The Schengen Agreement is the treaty which created the Schengen Area in Europe. The Schengen Area is an area in Europe which includes the territory of 25 different nations. The Schengen Agreement specifically made the Schengen Area a region in which citizens could easily travel between member states.
The Schengen Agreement thus eliminates the need for border controls for travel between the borders of the member states of the Schengen Area. The separate states still remain independent governmentally and functionally, but in terms of travel, the Schengen Agreement united the area effectively into a single entity wherein travel is easy, akin to how travel is easy between the different states of the United States of America.
The Schengen Agreement was originally signed in the town of Schengen in Luxembourg, which is how the Schengen Agreement received its name. The Schengen Agreement has been expanded from the original signatories of Belgium, Luxembourg, the Netherlands, West Germany, and France.
Now, the Schengen Agreement includes every member state of the European Union except for the United Kingdom and Ireland. Norway and Iceland also signed onto the Schengen Agreement, even though they are not part of the European Union.
Because it is now adopted as part of the legislature of the European Union, the Schengen Agreement is now treated as legislation instead of an international treaty, which means that it is amended according to the internal legislation systems of the European Union. The Schengen Agreement thus is primarily significant for the European Union states.