Federalism is shared power divided between the national and state governments. It helps define the powers of the states and the national government. It makes sure that the national government isn't too powerful and that the states/ people still have rights to hold power.
Some examples:
National government: says everyone must go to school
States government: chooses what to teach in each grade level.
In this example, the states are limiting the government's power so that they still have the right to choose their education. Powers that the states and national government have, balance each other out so that one is not more powerful and everybody's rights are respected