A covering of a set $S$ is a set $\{A_1,A_2,\cdots,A_t$} of non-empty subsets of $S$ such that $A_1\cup A_2\cup\cdots\cup A_t$ is $S$. (Note that $A_i\neq A_j$ for $i\neq j$; also $t$ can vary from 1 to $2^{|S|}-1$. The sets are not required to be disjoint). Use the principle of inclusion-exclusion to find the number of coverings of an $n$-set $S$.
I'm a little confused on how to start this problem, and what the ambient set and properties should be. Any hints for those would be appreciated.
We have $n$ conditions that each of the $n$ elements be covered. There are $\binom nk$ ways to choose $k$ particular conditions, and there are $2^{2^{n-k}-1}$ subsets of the power set that violate these conditions, namely, any set of sets that don't contain any of the $k$ elements. (We need to subtract $1$ because the sets must not be empty.) Thus, by inclusion–exclusion, the number of covers is
$$ \sum_{k=0}^n(-1)^k\binom nk2^{2^{n-k}-1}\;. $$
For $n=0,1,2$ this yields $1,1,5$, and indeed the set $\{1,2\}$ has the $5$ covers $\{\{1,2\}\}, \{\{1\},\{2\}\}$, $\{\{1,2\},\{2\}\}$, $\{\{1\},\{1,2\}\}$ and $\{\{1\},\{2\},\{1,2\}\}$.
This is OEIS sequence A003465.