The capital city is Tskhinvali. South Ossetia was a Soviet Oblast (regional administrative unit) during the Soviet period and the majority of inhabitants didn't want to join the Georgian Republic. The independant Republic of South Ossetia was declared November 28, 1991. However, it's never recognized by any other government. The Ossetians are descendants of Alans, a Sarmatian tribe. They have lived in peace with Georgians most of the time except some conflicts during the years. They have also integrated pretty well with georgians. However, Georgia never accepted an independant South Ossetia. The Russian Federation consider South Ossetia to be inhabited by Russian citizens and President Medvedev said in a speech August 8 that he will protect Russian citizens anywhere.

Georgias good relations to EU and USA is an unpredictable element in the siuation. The possibility for a conflict between Russia and NATO is there. However, few experts predict today any major international crisis because of this.

Read more background at Wikipedia

Here are som video links to the recent conflict: