Personally I just think smaller mostly independent systems have a greater chance of having more freedom and having at least one of them work out well, and I view confederation as a way to enable a multitude of small systems to reap some of the advantages of a larger system (mainly mutual aid and defense) with much less risk the corruption and oppression that a larger system rapidly spirals into.

I don't view it as an ideal system or anything like that, just as one superior to a centralized federation, and as a stepping stone towards more minimal governments.