Federalism is a political system where power is divided between a central authority and various regional entities, such as states or provinces. This structure allows for a balance of power, enabling local governments to address specific needs while still being part of a larger national framework. In a federal system, both levels of government have their own responsibilities and can operate independently in certain areas. This can lead to more tailored policies that reflect the diverse interests of different regions, promoting local governance and citizen participation in decision-making processes.