Permissible to drive in and around Monaco?

Have at it, but it gets crowded in the small central core, so you'll probably wind up walking there.

There is really no where to drive because it is so small. There are huge underground (actually in the cliffs) parking garages so park it and walk. The bus system is cheap also.

Scott, I'd suggest parking in the facility that Frank mentioned. You can either walk up the hill (doesn't take that long) or take the Bus (a bargain at €1). You can also walk to Monte Carlo, which is across the bay from Monaco, or again take the Bus. I've walked that route and it's not that difficult. Happy travels!

There are no restrictions. Some streets are difficult to drive though due to all the tunnels dug underneath, very tight roundabouts, multi-layered overpasses in a very tight space.

Nearly right. We regularly drive over most of Monaco. Only if the car is from Monaco - neat white number plates with the red lozenges - or from the immediate vicinity (Department 06), can it drive up the Rocher. Everybody can drive everywhere else, and despite comments above, I find plenty of places to drive. I take the bus everywhere, but I find it neither difficult nor particularly expensive to drive there. Parking is a breeze, even if the car park at the station has - if memory serves - 18 levels. Sounds like a video game. Getting a car around Beausoleil, the French suburb which wraps around the north side of Monaco can be a real hassle.