While states set many laws at the state level, and these laws can vary, our country would essentially be made up of fifty different countries if we didn't have a federal government tying us together and keeping things in check. By having various levels of government, from local to state to national, we are served at the local level, but also unified as one.
Without the federal government the costs of the states would increase dramatically. They would need to provide border control across every state line instead of just the outside of the United States. They would also all need to get their own military and their own weapons of mass destruction. Essentially every state would be weaker without the federal government to unite them as a whole.
After congress adopted the fed the 16th amendment States rights and individual rights slowly began to be replaced by privelege. When the Federal government learned they could simply use progressive taxes and budget items with laws attached to them, to circumvent the tenth amendment they went wild. Want a bridge, paved roads, or maybe a new courthouse? Well just take away this right and give the dummies a privilege. And you suckers eat it up as I get cuffed and go to jail. No the fed can kiss my butt!