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Model averaging is a widely adopted technique in federated learning (FL) that aggregates multiple client models to obtain a global model. Remarkably, model averaging in FL yields a superior global model, even when client models are trained with non-convex objective functions and on heterogeneous local datasets. However, the rationale behind its success remains poorly understood. To shed light on this issue, we first visualize the loss landscape of FL over client and global models to illustrate their geometric properties. The visualization shows that the client models encompass the global model within a common basin, and interestingly, the global model may deviate from the basin's center while still outperforming the client models. To gain further insights into model averaging in FL, we decompose the expected loss of the global model into five factors related to the client models. Specifically, our analysis reveals …