The ancient Iranian system of government can be understood under the term Érán–shahr. The word ērān is derived from middle Iranian ehrih “honor, nobility, German Ehre.” It goes back to Avestan airya “noble.” The term for “state, realm, dominion” in middle Iranian is shahr. The term airya daiŋhvö “lands, realms, kingdoms of the Aryans” is repeatedly mentioned in the Avestan hymns.
Érán is attested in the title of Ardeshir I, founder of the Sassanid dynasty on his investiture relief at Naqš-e Rostam. Ardeshir is called in Middle Iranian šāhān šāh ērān, and in Parthian šāhān šāh aryān “King of kings of the Noble Ones/the Aryans.”
The great trilingual inscription of Shāpūr I at the Kaʿba-ye Zartôšt in the Pars Province, contains the term Érán–shahr (Parthian Aryānšahr.)
The king declares in middle Iranian Ērān.shahr xwadāy hēm, Parthian Áryānšahr xwadāy ahēm, Greek egō . . tou Arianōn ethnous despotēs eimi “I am the god-ruler of the realm of the Aryans.”
Érán–shahr properly denoted the “realm, dominion, country, nation state” of the ancient Iranians, and goes back to the Avestan airyanām.
Shāpūr refers to his son Naresh as: ēr māzdēsn Narseh, šāh Hind, Sagestān, Parthian ary māzdēzn Narseh, “the Aryan, Mazda-worshipping Narseh, king of (northern) India, and the Scythians.”
Other Sassanid rulers from Ardeshir I onwards called themselves “the Noble/Aryan Mazda-worshipping king of kings of the Aryans érán/airán and the Non-Aryans an-érán/an-airán.”
The towering mountain fortress of the Iranian Plateau and the vast steppes of Central Asia were designated as the realm/lands of the Indo Iranians or ancient Aryans.
Other ethnic groups were limited to their respective homelands within the ancient Persian Empire, free to worship, and practice their laws and customs under the Mazda worshipping rule of the Éráns.
The ancient Iranians, as Indo-Europeans, never forced “Ahûrá Mazdá and his brilliant Immortals” on the alien tribes and peoples of their vast Empire.
In holy Denkart 7, the same distinction is made between érán/airán and an-érán. However, it shall be stressed that each ethnic group was considered EQUAL on its own merit in the ancient Persian Empire, and in the Zoroastrian texts.
Diversity in the ancient Persian Empire meant favoring cultural identity of each individual ethnic group within their vast Empire, but with strict boundaries existing between themselves and other alien nations/groups.