Persia is located in Iran and was historically the capital of the Persian Empire, which also contained non-Persian areas. A section of Iran called Pars represents the location of the original Persian people, although it's difficult to determine the exact boundaries of ancient areas.
While Persia is derived from the original name of the Persians, the name was most often used among Western people than those who lived in the area. When Arabs conquered Iraq, they pronounced Pars—both the people and the language—as Fars, which led to the name of the language Farsi. The Zoroastrian people who fled to India and other regions after the region was invaded, however, still use the term Parsi to describe themselves.