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One: you are required to be democratic but with some minor exploits you can change to another ideology if you want
Two: you must be playing any Western European country and own all the cores belonging to the others (Netherlands, Belgium, Luxembourg, France, Italy, Germany)
https://hoi4.paradoxwikis.com/Formable_nations/Europe#European_Federation
To do this as Germany you have to do the democratic path and take over the Allies to puppet and annex them or do the democratic fascist tree exploit (pick Rhineland and justify war on any democratic country like Belgium, let them capitulate you then you can be democratic and still use the fascist tree to conquer Europe).
However I'd also like to add that the new German Focus Tree makes it possible to form the European Federation EVEN WITH Monarchist Germany route (i.e. German Empire) through the 'peaceful' route of Mitteleuropa (that is achieved by going through 'Align Czechoslovakia' as opposed to 'Carve-up Czechoslovakia'). And my gripe remains still that in some run I've been able to form them, or at the very least have the decision to do so popped-up, while on other occasion it does not.
As for the wiki page, I am willing to go as far as saying that it is not quite as dependable as it should be.
One piece of additional information regarding my recent run that I've been able to produce for my second point (both in conditions and run description as above) is: the decision for forming the EU, Realize European Unity, and the decision to form the Holy Roman Empire is not listed in the decision overlay. I would argue that some sort of coding spaghetti made both or any formables at all to not be shown and I am in need of help of tracking down the 'what'.
I did have a game where I allied, puppeted and annexed the UK through the Middeleeuropa decisions and the decision to core the UK was the not in the expanded core decisions list.
I've also returned to report that in my latest run I have succeeded in making the decision shows itself by, still, going the Monarchist Germany route. The difference with my previous run that doesn't show the decision is that I'm going Historical Focuses turned on and disabling a few mods. One of which I think is related to the decision not showing is a mod called "Victory's March" posted on 30th of March 2024 by Crypticis. Notabene that I am not sure yet if his mod causes the decision to be bugged and also note that there are a few more mods that I cannot be arsed to find out and mention here (all of those are flavors that changes little in the way of focus tree).