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Federal courts are fundamentally distinct from state courts primarily because they deal with laws enacted by the federal government. This includes cases that involve federal statutes, the Constitution, and treaties. Federal courts have jurisdiction over a limited range of cases, including those that involve federal questions, such as disputes arising under federal laws, cases involving ambassadors or other public ministers, and cases in which the United States is a party.

This distinction is essential in the legal system, as the federal government has its own set of laws and regulations that are separate from state laws. Judicial decisions in federal courts can have nationwide implications, as they interpret and uphold federal law, which supersedes state law when there is a conflict.

The other options do not accurately convey the core differences between federal and state courts. Federal courts do not typically handle cases involving only state law; that responsibility falls to state courts. Also, federal courts are not limited to civil cases; they adjudicate both criminal and civil matters. While state courts may oversee issues related to illegal immigration in some contexts, this does not characterize state courts as a whole and does not define the primary functions of these courts compared to federal courts.