The significance of federal versus state rights lies in the balance of power between levels of government. Federalism allows for diversity in governance while establishing a national framework. States have the authority to enact laws addressing local needs, but federal law often supersedes state legislation, leading to conflicts over various issues, such as healthcare and education. This dynamic enhances democracy by providing multiple avenues for policy experimentation but can also result in inequalities between states. The ongoing debate about federal versus state rights reflects broader tensions in governance and societal values.