Characteristics
The various Habsburg possessions never really formed a single country - each province was governed according to its own particular customs. Until the mid 17th century, all of the provinces were not even necessarily ruled by the same person - junior members of the family often ruled portions of the Hereditary Lands as private apanages. Serious attempts at centralization began under Maria Theresa and especially her son Joseph II in the mid to late 18th century, but many of these were abandoned following large scale resistance to Joseph's more radical reform attempts, although a more cautious policy of centralization continued during the revolutionary period and the long Metternichian period which followed.
An even greater attempt at centralization began in 1849 following the suppression of the various revolutions of 1848. For the first time, ministers tried to transform the monarchy into a centralized bureaucratic state ruled from Vienna. The Kingdom of Hungary, in particular, ceased to exist as a separate entity, being divided into a series of districts. Following the Habsburg defeats in the Wars of 1859 and 1866, this policy was abandoned, and after several years of experimentation in the early 1860s, the famous Austro-Hungarian Compromise of 1867 was arrived at, by which the so-called Dual Monarchy of Austria-Hungary was set up. In this system, the Kingdom of Hungary was given sovereignty and a parliament, with only a personal union and a joint foreign and military policy connecting it to the other Habsburg lands. Although the non-Hungarian Habsburg lands, often, but erroneously, referred to as "Austria," received their own central parliament (the Reichsrat, or Imperial Council) and ministries, as their official name - the "Kingdoms and Lands Represented in the Imperial Council" - shows that they remained something less than a genuine unitary state. When Bosnia and Herzegovina were annexed (after a long period of occupation and administration), they were not incorporated into either half of the monarchy. Instead, they were governed by the joint ministry of finance.
Austria-Hungary collapsed under the weight of the various unsolved ethnic problems that came to a head with its defeat in World War I. In the peace settlement that followed, significant territories were ceded to Romania and Italy, new republics of Austria (the German-Austrian territories of the Hereditary lands) and Hungary (the Magyar core of the old kingdom) were created, and the remainder of the monarchy's territory was shared out among the new states of Poland, Kingdom of Serbs, Croats and Slovenes (later Yugoslavia), and Czechoslovakia.
Read more about this topic: Habsburg Monarchy