There has been a lot of discussion - perhaps too much - in the blogosphere about the polity of the Episcopal Church in the United States, and I have added to that discussion by posting comments on other blogs. Perhaps the best way to explain my own understanding of the situation is with a little history.
Before the War of Indepedence, the Church of England congregations in the colonies were under the authority of the Bishop of London. During the war, some of the colonial clergy remained loyal to the King, including Samuel Seabury. After King George's army lost the war, there was work to be done - reconciling clergy and laity who had been on opposite sides, and organizing an indpendent Church. There was nothing inevitable about the decisions that led to the formation of Dioceses and the election and consecration of Bishops. A congregational polity was common enough and was an option that wasn't chosen. Instead, those first Episcopalians chose to organize their congregations into Dioceses and their Dioceses into the Episcopal Church.
Both decisions involved a surrender of some autonomy to the larger body. Congregations could, in many places, be legally incorporated, but that did give them complete freedom in the ordering of their worship, common life, and ministry. Bishops had to approved the calling of clergy - and in many places and at many times, the Bishop decided which clergy were serve which congregation. Dioceses could be incorporated, but that did give them complete freedom. The General Convention approved the Book of Common Prayer, the only book for most of the Episcopal Church's history that was authorized for public worship. The General Convention also enacted Canons that regulated many aspects of Diocesan and congregational life, from the approval of candidates for ordination to the requirement that financial records be audited each year.
In order to enjoy the benefits of being part of the Episcopal Church, congregations and Dioceses have surrendered some of the autonomy that they could have enjoyed had they chosen another polity. Imagine how an Independent Baptist might view the way in which Episccopal congregations call clergy - you mean the Bishop has to approve? - or the way Dioceses elect a Bishop - you mean Bishops and Standing Committees who might never have visited your Diocese have to consent to the election? - or our use of the Book of Common Prayer and the Lectionary.
We have made an important choice, one that has an impact on so many aspects of our life together, a choice that I think was a very good one. Now there are those who argue, not that the choice wasn't made, but about what that choice means. They argue that the Diocese is sovereign and that in choosing to be in union the General Convention, Dioceses did not surrender any significant autonomy. Given the General Convention's authority to enact canons that govern so many essential aspects of the life of a Diocese, it seems pure foolishness to assert that Dioceses are sovereign and that the General Convention isn't.