R. Ben Madison claims to have first coined the term Micronation to describe Talossa.
Several definitions of the term have been used by various people. More can be found on 
the Wikipedia article on Micronations.
In the case of the Republic of Talossa?, we use Micronation to represent fantasy countries without United Nations representation and without official recognition from any of the members of the United Nations.
Such states might or might not claim territory, might or might not exist outside of the Internet.