A federal system is a form of government where power is divided between a central authority and smaller political units, such as states or provinces. This structure allows for multiple levels of government, each with its own responsibilities and powers. For example, in the United States, the federal government handles national issues, while individual states manage local matters. In a federal system, both the central and regional governments can create laws, collect taxes, and enforce regulations. This division helps accommodate diverse populations and regional interests, promoting local governance while maintaining a unified national framework. Examples of countries with federal systems include Canada, Germany, and Australia.