Federal courts are part of the United States judicial system and handle cases involving federal laws, the Constitution, and disputes between states or citizens from different states. They operate under the authority of the U.S. Constitution and are structured in three main levels: District Courts, Courts of Appeals, and the Supreme Court. District Courts are the trial courts where cases are first heard, while Courts of Appeals review decisions made by District Courts. The Supreme Court is the highest court and has the final say on important legal issues, ensuring that federal laws are interpreted consistently across the country.