Can someone please explain what a federated exchange solution is?

Hi,

If you want to know Federation, you can refer to the following articles.

Configure federated sharing

https://technet.microsoft.com/en-GB/library/jj657483(v=exchg.150).aspx

Federation

https://technet.microsoft.com/en-GB/library/dd335047(v=exchg.150).aspx

Configure a federation trust

https://technet.microsoft.com/en-GB/library/jj657462(v=exchg.150).aspx

Best regards,

In short, federation is when two Company trust each other and when enabled they can share precense,calendar and global address list.For deeper info,please refer to Belindas link.