Chapter 1 introduces the central puzzle the book seeks to solve. We start from the proposition that limited statehood is not a historical accident or some deplorable deficit of most Third World and transition countries that has to be overcome by the relentless forces of economic and political modernization in an era of globalization. We suggest that “limited statehood” is here to stay. Governance research has to account for limited statehood. Accordingly, we ask how effective and legitimate governance is possible under anarchy. How can political rule as well as security and other collective goods be provided when the state is weak or even absent? Areas of limited statehood are neither ungoverned nor ungovernable. We find great variation with regard to effective and legitimate governance, pertaining to both rule-making and the provision of public goods and services. The chapter goes on to discuss the book’s theoretical contributions in addressing this puzzle, as well as its normative, political, and world order implications. We conclude with a roadmap of the book.