Schengen Area: There are territories of member states that are exempted from the Schengen Agreement. No area that is located outside Europe (except the Canary Islands, the Azores and Madeira) is part of the Schengen Area. Some areas in Europe are also excluded.
Schengen Area: Twenty-two of the twenty-eight European Union (EU) member states participate in the Schengen Area. The remainders: Bulgaria, Croatia, Cyprus and Romania are legally obliged and wish to join the area, while Ireland and the United Kingdom maintain opt-outs.
This map demonstrates which countries belong to the Schengen zone. The Schengen area is a key element to the EU, and one of the three "laboratories" that were mentioned in my reading. It paved the way for certain JHA agreements, now known as AFJS.