What is a federated portal?
A federated portal is a portal that consumes resources such as remote portlets, books, and pages. These remote resources are collected and brought together at run time to a portal application called a consumer, which presents the federated portal to end users. So in federated portal, portal application and portlets will be running in different containers where as in local portal, both will be running in a single portal container.
A federated portal reflects a true Service Oriented Architecture(SOA). These individual remote parts basically called producers of a federated portal that can be maintained, updated, and released independently without redeploying the consumer portal in which they are surfaced. Lets say your organization has depts like sales, marketing, human resources and finance. Every department has its own budget, needs and resources. Sales dept doesn't need to worry about how finance portlets will look like though both portlets will be running under a portal consumer. Instead of building all portlets into a single portal applications, you can develop portlets for each dept separately and deploy portlets as seperate web applications running on remote servers while portal consumes them using WSRP. You can have producer for each department if you want to which will be easy to maintain. Federated portal uses WSRP(Web Services for Remote Portlets (WSRP) for decoupling portlets from portal.
Enterprise or (Local) portals are the one where all portlets will be developed, maintained and deployed in a single container. So small changes to the portal, you need to perform whole life cycle - design, development, testing, deployment and propagation to development to staging to production. This may be OK for small sized portal but as the portal grows maintenance becomes very difficult. For many organizations, the cost of such maintenance is significant and can include portal downtime. Federation simplifies portal maintenance.
P.S: All WebLogic Portal applications are, by default, both consumers and producers. This means that every WebLogic Portal application is capable of hosting remote portlets and consuming them. With a federated portal architecture, separate development teams, perhaps in separate business units, operating in different geographical locations, can focus on and develop their respective portlets. These development teams can update, test, and release their portlets independently from one another. You do not need to redeploy a federated portal every time a portlet deployed in aproducer changes. When a remote portlet is updated in a producer, all of the consumers of that portlet receive the change immediately and automatically.