Federalism is a constitutional principle providing for two layers of government - a central government and a lower level of governments - provinces, regions, republics or states - with some kind of chamber to represent the lower units in the central government, and usually some provision for guaranteeing the integrity of the lower levels of government.

The vertical axis is concerned with the distinctions between federal systems based on strong unitary political actors - states - and those whose lower units - nations - are more loosely assembled populations. The horizontal axis specifies the level of formality in the relationship among components of a federal union, ranging from a highly institutionalized set of constitutional requirements to the minimal recognition of a higher power, or authority, to keep the units together.

Historically, the LLQ represents the earliest as well as the most recent experience of federal unions, ranging from the Hanseatic League and the Zollverein to the European Economic Community, based on the contractual regulation of custom and market relations. The ULQ refers to the political alliances among regional communities during the process of state-building, from medieval parliamentary assemblies to the confederal agreement in the first American constitution. The pioneer example of the URQ as a genuine federal system is the Swiss constitution in which the local units yielded a more substantial part of their powers to the central government. This model became established and popularized with the founding of the United States of America as the prototypical federal system. The LRQ is a unitary yet unstable assembling of different nations, brought together by a charismatic figure through a process of centralization to compensate for a weaker political structure, as with Tito’s Yugoslavia.