In a federal system, the central (or federal) government has much more authority than in a confederal system. The central government controls more trade policy, and makes decisions about policy areas that involve interactions between states (such as highway systems).
Nationality is a legal relationship between an individual person and a state. Nationality affords the state jurisdiction over the person and affords the person the protection of the state. What these rights and duties are vary from state to state.
nationality (plural nationalities) Membership of a particular nation or state, by origin, birth, naturalization, ownership, allegiance or otherwise. National, i.e. ethnic and/or cultural, character or identity. A people sharing a common origin, culture and/or language, and possibly constituting a nation-state.