Federalism is basically when there are sub-levels to a government. This means that if a government has two or more powers in a territory and govern institutions, this means that this place or area has a federal government. They have certain powers that the central government would not be able to exercise.The best example of a federation is the United States of America. There are many federations in the world, but there is almost no example of a confederation. The best example is the European Union. This model definitely helps us to understand what a confederation is. A confederation is a union of different countries who are banded together for a common purpose.