A confederation is a large state composed of many self-governing regions. Unlike a federation, a confederation has a very weak central government with little influence over the actions or policies of the member regions. However, on certain key issues, such as defense or currency, the central government will be required to provide support for all members.
Sometimes confederation is erroneously used in the place of federation. This can be a simple slip in expression or can come from a belief that they mean the exact same thing. This can also arise from Confederations that became Federations(the German Confederacy became the Federal Republic of Germany,) or when the status of a state is ambiguous such as the United States of America, (which although has a stronger central government than when it started, still has one much weaker than that of most federations.)
The best examples of modern day confederations can be found in the government of Switzerland and the European Union. Switzerland is a state with a very weak central government, which allow for great powers of self-government for the member regions. The European Union on the other hand is a confederation of sovereign states.
As a verb, confederation refers to the process of (or the event of) establishing a federation or confederation. For example, in Canada the phrase "after the Confederation" generally means "after the British North America Act of 1867", which has established the Dominion of Canada.
Confederation Day is frequently a holiday in federations or confederations, equivalent to Independance Day for any entity that achieved statehood as such. This is often renamed or colloquially celebrated under a different name (i.e. in Canada Confederation Day (July 1st,) was renamed Dominion Day, and was again renamed Canada Day.