What two things make up federalism?

The two components of federalism consist of individualized constructions of power and overarching, centralized power.

Federalism is an essential principle to the United States Constitution.  The framers of the American Constitution understood the need for balance between federal and state power in the new government.  They recognized that if states had too much authority, as they did in the Articles of Confederation, nothing could be done for the benefit of the entire nation. Each state would be its own tiny nation, and national unity would be impossible.  At the same time, the framers were keenly aware of what happened when central authority exerted too much power.  The entire American Revolution was fought to be free from tyrannical authority in the form of England and King George. 

A balance between federal and state power was sought. In the American constitutional principle of federalism, power is shared between the federal government and state governments.  Specific duties are allotted to both. The framers were inspired by advocates of federalism like Montesquieu.  He believed that federalism was a way to achieve the best of both forms of political power.  States could exercise autonomy, while federal governments would be able to act in the nation's interest.  This combination of state and federal power make up federalism.