What does a federated or federation sign on mean for the UI?

A product manager recently explained that we want to start looking into a federated sign in to work more nicely with our partners. He suggested a two-step sign in approach (like google accounts) where the user enters their username, clicks 'next' and a second screen to enter their password.

Why does a federated sign on experience need this two-step approach, and would it be possible to avoid this?