I think equestria is an benevelont absolute principality. The princess doesn’t have any laws that prohibits her to abuse her power.
while a grand federation is possible, but chancellor neighsay seemed xenophobic towards non-ponies, suggesting that griffons, hippogriffs and many other non-ponies are seen as foriegn.
I would say equestria is an imperium of man in 30k, the emperor have absolute power and magical powers the same with princess celestia.