Federalism impacts state rights by distributing power between national and state governments, allowing states to operate independently in certain areas. This division enables states to tailor policies to their unique circumstances and needs, supporting local governance and regional autonomy. However, it can also lead to conflicts over jurisdiction, especially in issues like healthcare, education, and environmental regulation. While federalism can enhance democratic participation by empowering states, it may also complicate coordination and resource allocation across various levels of government, necessitating effective communication and collaboration between state and federal entities.