David Imel explaining the fediverse on the latest Waveform video:

Just like the United States is a federation, right? Like this group of states with independent laws, but also this higher order of laws under the Constitution that could freely move and trade with each other. A federated social network is kind of the same idea. It has its own rules and algorithms depending on a platform you're using, but all of these different platforms could freely interact with each other and interoperate in their own federation or Fedoverse.

I’ve always liked the “federation is like email” comparison, but this is a good one too!