What is the best way to understand the European Union?

The European Union is a complex entity, which has developed gradually since the end of the Second World War (1945) through the addition of new powers, organizations and member-states.

In the modern day, the European Union can be understood as something between a federation and an association. A federation is a form of government where multiple states give up some of their soverignty (that is, their authority over their own territory) to a central government - in this sense, sovereignty is shared between the federal government and each of its states. An international association, meanwhile, is a situation whereby multiple state governments retain their sovereignty, but agree through treaties to act collectively. An example of this is the United Nations, where states act collectively in a diplomatic sense, or to some extent alliances such as NATO, where states act collectively in military affairs.

The European Union today came into existence through the Maastricht Treaty (1991), where a number of European associations were merged into a new entity - the EU. In the modern day, the European Union has some characteristics of a Federation, in that it has it's own institutions like the European Parliament with the power to legislate for the entire union, a characteristic that denotes official power and thus sovereignty. It also appears to have a form of constitution (a series of principles enshrined in law that define how the state operates), although again this constitution is not entirely codified, and has evolved out of multiple treaties. Nonetheless, the member-states of Europe have not given up their soveriegnty in an official sense, and many decision made at the European level require all state governments to consent - as in an association.

To describe this new form of political entity, some political scientists have developed the term "supranational", as distinct from "international" to describe it. Supranational implies that it is not quite a federal state in it's own right, but is nonetheless a body that exists in a political space above that of its member states. Connected to this is the concept that the European Union comprises a voluntary "pooling" of sovereignty by its member states. This means that member states do give up some soverignty as in a federation, but that this soverignty remains theirs and they may withdraw it at will. This has been seen in the case of opt-outs, used especially by the UK, and has it's ultimate expression in "Brexit", where Britain has voted to leave the union entirely. A good way to make this easier to understand is through a comparison with devolution in the United Kingdom, where although sovereignty remains constitutionally in the hands of Parliament in Westminster, the parliament has decided to loan, or "devolve" some sovereignty downards to Scotland, Wales and Northern Ireland - constitutionally this may be withdrawn at will, but can nonetheless by used by the devolved states in the meantime. The European Union is the same as this, but going upwards instead of downwards.

Nonetheless, this way of thinking doesn't explain everything about the EU. In general terms, it is best to think of the EU as a kind of composite, or "mish-mash" of governmental forms. One of the exciting things about politics is that it is always changing and always in debate - the European Union is a great example of these two themes, and it is best to become educated on how the European Union operates and then decide for yourself what you think it is.