The area is inhabited by the ethnic Pathans or Pushtuns, effectively a traditional tribal people. On the map, it is part of Pakistan, but the Pakistani government has never exercised direct control over it. Indigenous tribal chiefs control all aspects of life within the area.
Pathan territory spans the border. 60% of them live in Pakistan, 40% in Afghanistan. In Afghanistan, they are the largest ethnic group at 40-odd% of the population and have often dominated government and business.
The Pathans have twice defeated the greatest armies of their day. When Alexander the Great attempted to cross the pass, he did not manage it for several weeks, until he bribed one of the local chieftains into assisting him against the ones who were blocking him. At the height of British power during Queen Victoria's reign, the Khyber was the border of the Raj and of Imperial India. Britain fought several wars against the Pathans and never managed to successfully subdue them. In the first Anglo-Afghan war, a force of 16,000 (Which consisted of 4,500 professional soldiers) attempted to quell the indigenous peoples through force and all but one man perished.
Since 1980, the Pathans have fought the Soviets, Afghans, American-led allied forces, and the Pakistani military.
The Pathans provided most of the adherents of Taliban. Many — both pro and anti-Taliban — are still (2012) fiercely resisting various efforts by US and allied forces and/or the Pakistani government to control their area.
Crossing the Khyber has always been something of an epic adventure. Today, it is far too dangerous for most travellers.
At the top of the pass is the town of Landi Kotal.
Except for trails which only locals can use safely, the only way in or out is via the main road through the pass.
From Peshawar to Torkham (the border town) you are required to obtain a permit and travel with an armed guard.
At the top of the pass is the town of Landi Kotal, famous for smuggling everything from consumer electronics to AK-47s. Attractions for the truly intrepid tourist include weapons factories and hashish warehouses.
The pass is on the Istanbul to New Delhi over land itinerary, though the current recommended route avoids it.