In network routing, BGP confederation is a method to use Border Gateway Protocol (BGP) to subdivide a single autonomous system (AS) into multiple internal sub-AS’s, yet still advertise as a single AS to external peers. This is done to reduce the number of entries in the iBGP routing table. If you are familiar with breaking OSPF domains up into areas, BGP confederations are not that much different, at least from a conceptual view.
And, much like OSPF areas, confederations were born when routers had less CPU and less ram than they do in today’s modern networks. MPLS has superseded the need for confederations in many cases. I have seen organizations, who have different policies and different admins break up their larger networks into confederations. This allows each group to go their own directions with routing policies and such.
if you want to read the RFC:https://tools.ietf.org/html/rfc5065j2networks family of sites