Federalism impacts the governance of a country by distributing power between national and subnational levels of government, allowing for greater regional autonomy. This system enables local governments to address specific needs and preferences of their constituents while maintaining a unified national framework. Federalism fosters diversity in policy-making, as states or regions can experiment with various approaches to governance. This structure encourages participation and responsiveness to local issues but can also lead to tensions between different levels of government regarding jurisdiction and resource allocation.