Mandrake83 (sorry I posted it before you) in Italian Forum posted this chart to explain the political situation:

You can see Ferrara Duchy in cyan between Papal State, Milan, Venice and Florence.
Ferrara was at start a feud of Pope because Venice's threat, and saw Venice itself as a natural enemy. Soon became a strong cultural, economical and militry power until 1598. Was in Lombard League too from the very beginning. However, because geographical position and strong ambition, Estensi sometimes went out to papal sphere of influence, looking for expansion (and sometimes went in war against Pope itself). At the end of XIII century Ferrara territory cut Italy from east to west. It was a little but powerful country, with strong cultural influence and good military power, often allied with Milan, Florence and France instead Papal State.