and decentralised means there is no server
no, it means there's no central server. You still need a Matrix server to handle communications, but there's no "central matrix server", the servers discover each other based on a baked-in "known good" server list + ad-hoc discovery (e.g. if a server has a group chat with a member of a server your server doesn't know yet, and you join that group chat, your server and the unknown one exchange metadata and so on).
No, this is called decentralisation.
Federation would be the exchange of rules, policies, blocklists, etc., beyond the ability of servers to talk to each other.