Shevi'is, Chapter 6, Mishnah 1. To understand this mishnah we need a bit of historical background: when the Jewish people entered the Land of Israel the first time, coming up from Egypt, they conquered a larger area than the one later settled by those who came up from the first exile in Babylonia. Hence the two basic terms in the mishnah: "kol shehechziku olei Mitzrayim" - the broad territories held by those who came up from Egypt, and "kol shehechziku olei Bavel" - the smaller area that was conquered and came into the possession of those who came up from Babylonia.
The region settled by those who came up from Babylonia is the heartland of the Land of Israel in the days of the Second Temple, and there the laws of shemittah apply in full. In the areas conquered only by those who came up from Egypt, and not conquered again by those who came up from Babylonia, those laws do not apply. The reason: the first conquest did not preserve its sanctity, and the first sanctification was nullified with the first destruction; the later conquest of those who came up from Babylonia, the second sanctification, did preserve its sanctity and was not nullified even after the destruction of the Second Temple.
"Shalosh aratzos lash'vi'is" - three lands for shevi'is:
The mishnah opens by establishing that geographically there are three distinct regions with regard to shemittah:
"Kol shehechziku olei Bavel, me'Eretz Yisrael v'ad Keziv" - from the Land of Israel itself up to the region of Keziv in the north. There: "lo ne'echal v'lo ne'evad" - the produce is not eaten and the land is not worked in the shemittah year.
"V'chol shehechziku olei Mitzrayim, mi'Keziv v'ad hanahar v'ad Amanah" - the area conquered in the first conquest only and not in the later one: from Keziv up to a certain river in the north, and up to Amanah, which is Hor Hahar in the northwest of the Land of Israel. There: "ne'echal v'lo ne'evad" - the produce may be eaten, but working the land is forbidden.
"Min hanahar u'me'Amanah ulifnim" - "ne'echal v'ne'evad" - the produce may be eaten and the land may be worked.
What does "lo ne'echal" mean?
Two views are offered in explaining this prohibition against eating:
If the land was worked in a manner that is not permitted and produce grew there, it is forbidden to eat what grows there.
The reference is to the laws of bi'ur: once the time of bi'ur has arrived and the mitzvah of bi'ur was not properly fulfilled, this produce may not be eaten.
In this light, the permission of "ne'echal" in the area held by those who came up from Egypt is also understood: either the produce grew there legitimately and is therefore permitted to be eaten, or the law of bi'ur does not apply to that produce. Working the land, however, was forbidden there as well.
It is worth noting the wording of the mishnah, "ulifnim," which seems difficult, since it would seem more fitting to say "outside," beyond it. The reference is to the areas north of this border, which are outside the Land of Israel in every respect - even those who came up from Egypt never reached there - and therefore "ne'echal v'ne'evad," and they are considered outside the Land of Israel.
To summarize: there are three lands for shevi'is: the territory of those who came up from Babylonia - not eaten and not worked; the territory held only by those who came up from Egypt - eaten but not worked; and the territory beyond it, which is outside the Land - eaten and worked. The difference lies in the fact that the first sanctification was nullified with the first destruction, while the second sanctification was not nullified with the destruction of the Second Temple.