With the Trade Federation blocking and invading Naboo, it set off a chain of events that would eventually lead to the Clone Wars and, in turn, the entire Star Wars saga. Yet, given its importance, the details of the invasion are never fully explained, with the opening crawl only giving a short summary of events. So, why did the Trade Federation invade, and why was Naboo chosen as their target?
Star Wars: The Phantom Menace opens with, "The taxation of trade routes to outlying star systems is in dispute. Hoping to resolve the matter with a blockade of deadly battleships, the greedy Trade Federation has stopped all shipping to the small planet of Naboo." But to go into further detail, the Trade Federation was a trading conglomerate, and its business became so large that it earned a seat in the Galactic Senate. For years, it sought to control all trade routes in the Galaxy, taking as much profit from people as possible. Yet, the Senate eventually voted on a law to tax trade routes, which the Federation saw as too costly.
With Darth Sidious acting as an ally to the Trade Federation, he encouraged them to set up a blockade around Naboo. Much like real-life protesters blocking a road, the Federation stood in the way of the Naboo trade routes, which was entirely legal in the Republic. And as for why Naboo got chosen, the planet was rich in the resource called plasma, which was an efficient and costly power source. And to top things off, Naboo held no army, meaning it could safely get occupied.
These were the reasons that persuaded the Viceroy to blockade Naboo, but Darth Sidious had his own agenda. He further pushed the Trade Federation into invading the planet, promising it would help their cause. Even the Viceroy was cautious about the idea, asking, "My lord, is that legal?" Sidious then replies, "I will make it legal." But in reality, he was throwing the Trade Federation under the bus, as he wanted his alter-ego of Palpatine to gain sympathy from the Senate.
Palpatine was born on Naboo, so his pleas for change felt genuine. Then, with his subtle hints that Chancellor Valorum was too slow to act and unfit for office, Palpatine forced a vote of no confidence. That gained him even more power within the Senate, and slowly his plan of rising to Emperor began.
The Trade Federation always believed things would work out with the invasion. They constantly denied it and hoped to gain control over Queen Amidala before things went public. Yet, they didn't expect the pushback from Padme and the Jedi, and ultimately the Viceroy was arrested, leaving Palpatine in a far better place of power. Not only was he Chancellor of the Republic, but he also had crippled the Trade Federation into a much more vulnerable position.
So, as with most events during the Star Wars Prequels, everything went according to Palpatine's plan. The Invasion of Naboo was to be an easy task for the Trade Federation, but it was secretly all a ploy for Sidious to take power. And as with everything the Sith Lord did, he was the only one to gain something out of the entire crisis.