Annam was the central region in those parts of French Indochina that eventually became South Vietnam. This area contains the Central Highlands, which are the traditional home of the Montagnard peoples, who consider themselves ethnically distinct from the lowland Vietnamese. Annam is the Chinese name for what had been called, in Vietnamese, Dai Viet
Under the Nguyen Dynasty, its traditional capital was Hue, and it was often considered the center of classic Vietnamese culture. Bao Dai had been Emperor of Annam before entering the French Indochinese government.
Annam generally corresponded with the II Corps tactical zone of South Vietnam. While the core of the Ngo Dinh Diem government were from the north (i.e., Tonkin), Diem himself was an Annamese Catholic.
According to Douglas Pike, the lowland Annamese considers himself the only true Vietnamese, heir to an esthetic and intellectual tradition that the Northerners and Southerners cannot appreciate. He sees the northerner as a money-grubbing boor and the southerner as an unintellectual rustic. 
- Douglas Pike (1969), War, Peace and the Viet Cong, MIT Press, p.54