this is basically what Wordman said i'm just repeating it in my own words.. that is, how i do it..
• To divide your landmass into nations you will have to make separate closed shapes and use pathfinder: divide.. i do one at a time or blocks at a time then subdivide those because it gets messy. Everytime you divide overlapping shapes you have leftover parts to be deleted so it is easier to work with fewer at a time.
• Always keep spare outlines of our original objects somewhere cause you'll need them later. So, you make a copy of your continent to be divided... copy it to a new layer and fill it with black then set the opacity to something like 20%. This is so that after you divide it you will be able to see extra overlapping shapes as they will appear darker.
• Draw an object the shape of the new country you want (also 20% opacity black) and hang it over into the ocean. Select the continent shape and the nation shape and then use the pathfinder palette : divide. Now you will have two shapes. Ungroup them and discard overlapping areas. Throw away the areas in the sea as well.
• Now take the portion of the continent that needs to be divided farther and repeat. It's a good idea to put that nation shape that is done onto another layer safe from accidental deletion.
After doing this you can choose your landmass then apply effect: stylize: inner-glow and play around with that... you can set that object or sub-layer to multiply (overlay, normal or whatever) and play around with the opacity to get the desired look. If you want to edit that effect later you can open the "appearance" palette and it will show you what effects are applied to the object selected. You CAN apply effects to entire layers as well.. just try and do one or the other if possible as it can get really confusing with a lot of layers. For instance that torentine map has god-only-knows-how-many layers and i have had some baffling situations where nested effects get very tricky so i try to avoid that.
ALSO.. just FYI.. to define separate countries on that Torentine map i used a duplicate of the outline and gave it a thinner solid stroke of the same color (on the inside of the object which can be controlled in the stroke menu), then turned the opacity down on that object, set it to multiply and put it above the inner glow outline.