Why is there a neutral or in occupied zone? Is it explained and I missed it. Is it a buffer between Germany and Japan? Seems odd neither would have the resources to control it.

It's a buffer between the Japanese Empire and the German Empire.

The buffer area runs from Canada all the way down to Argentina. And there's a similar buffer area in Asia running from Central Russia down through Pakistan.

From what I recall, the reasoning isn't explained specifically, but there are some allusions to it being part of a treaty or agreement between the powers. And you can tell that relations between the two empires are strained.

Thank you sir.

I always figured it was just to keep the two powers from having a shared border, in order to avoid conflict over it.