The United States has a federal system of government. What does that mean? The national government has most of the power. The national government and states share power. Local governments have most of the power. The national government is controlled by a small group of people.

It means that the national government and its states' share power.

Why the other statements aren't correct:

If the local governments hold more power, that would be confederal system (like the Articles or Confederation).

An oligarchy is a government run by few people.

If the national governmenr holds most or all power, that is a unitary system of government.