The Fog Village is located in the southwest the Land of Earth, far away from the Hidden Stone, and any other official country with a hidden village. This is because many decades this village was known as Enmugakure no Sato, the Village Hidden in Fog, and it was a secondary, smaller hidden village, set up to provide back up for the main Stone shinobi and protect the outer borders.
Over the years, and through many wars, however, this place became a normal village, the academy being torn down to make room for something else much more needed, a hospital.
Shinobi do still live here, but not because they were posted here, but because it is their home. Here the older shinobi who have the time to do so, teach young, potential ninja within the village, training them in their own ideals and those of the village. Because of this, they feel devotion only towards their own village and their sensei, not towards the Tsuchikage and the Land of Earth as a whole.
The village is officially run by the Earth daimyo, but it has really just been forgotten by the rest of the world. Because of this, it is actually lead by the Village Counsel of Elders, made up of the nine oldest and wisest villagers. Everything must go through them before it will be put into effect, and they also hand out the missions to the Fog shinobi...if there ever are any.
As the name would imply, this village is almost constantly surrounded by a thick ground fog that, even in the middle of the day, never clears up completely. This is do to the effects of a large river that runs along the southern Earth border near the village, and a small range of mountains to the north.
Because the gound is always soft, and often more mud than dirt, the shinobi here have developed their own mud-based Earth Release techniques. Like Kirigakure they also have a technique unique to their shinobi, the Enmugakure no Jutsu, or Hidden Fog Technique, which creates a thick layer of fog that covers the ground and rises up so that nothing is left visable except for the enemies torso. This allows them to sneak easily around in the fog without being seen, because the fog is constantly shifting and moving all on its own.