What is a BGP Confederation?
By its true definition, a confederation is,
An organization which consists of a number of parties or groups united in an alliance or league.
But what is a BGP confederation?
A BGP confederation is an alternative method to route reflectors, used to reduce the number of BGP peerings within a single AS. Furthermore it is a single AS that has been subdivided into a number of internal sub-AS’s, yet still, advertise as a single AS to external peers  .
Figure 1 - BGP Confederation.
Within the confederation, each sub-AS (inter-confederation) is assigned a private AS number (64512-65535). Though eBGP is used to peer each of the sub-AS’s, the rules of iBGP still apply to each inter-confederation i.e attributes are not altered and an iBGP full-mesh is still required.
To avoid routing loops, a sub-AS uses a confederation sequence, which operates like an AS path but uses only the privately assigned sub-AS numbers.  These are stripped prior to the router sending UPDATEs via eBGP.
 "BGP confederation - Wikipedia." https://en.wikipedia.org/wiki/BGP_confederation . Accessed 18 Nov. 2017.
 "Understanding BGP Confederations - Technical ... - Juniper Networks." https://www.juniper.net/documentation/en_US/junos/topics/concept/routing-protocol-bgp-security-confederation-understanding.html . Accessed 18 Nov. 2017.