Its an elective (voluntary) federation.

Within a framework designed for and around federations.

So analagously, consider maybe a set of countries that agree to a mutual trade agreement.

Instead of a multiplicity of bilateral negotiations, you have a collective group mechanism for dispute settlement, or maybe steering and implementing a new or revised regional strategy.

Or, to drop the analogy down to the more mundane and practical:

Instead of you and 5 of your friends all texting each other seperately, to figure out the carpool schedule for next week… you all just have a group chat for this.

This can seem unnecessary when scales are small.

Then maybe you happen to scale up, and then you find that the old way of doing things is actually more chaotic and confusing, and has a whole bunch of serious flaws.

Then you look back at the goobers that did all that seemingly at the time pointless extra work, and call that foresight.