Trading off between realism and too much abstraction is an important issue to address in microscopic traffic simulation. In this chapter the authors bring this discussion forward and propose a multi-agent model of the traffic domain where integration is ascribed to the way the environment is represented and agents interoperate. While most approaches still deal with drivers and vehicles indistinguishably, in the proposed framework vehicles are merely moveable objects whereas the driving role is played by agents fully endowed with cognitive abilities and situated in the environment. The authors discuss on the role of the environment dynamics in supporting a truly emergent behaviour of the system and present an extension to the traditional car-following and lane-change models based on the concept of situated agents. A physical communication model is proposed to base different interactions and some performance issues are also identified, which allows for more realistic representation of drivers' behaviour in microscopic models.