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.
Learner's definition of NATIONALITY. 1. [count] : a group of people who share the same history, traditions, and language, and who usually live together in a particular country. The country is home to five nationalities and seven languages.