Правительство изменило правило.

Because правительство is a neuter singular noun in Russian.

In the past tense, Russian verbs agree with the subject in gender and number:

• изменил = masculine singular
• изменила = feminine singular
• изменило = neuter singular
• изменили = plural

So:

• Правительство изменило правило. = The government changed the rule.

Even though a government is made up of people, the noun правительство is grammatically singular and neuter, so the verb must match that grammar.

A big clue is its ending: -о.

Many Russian nouns ending in -о or -е are neuter.
So правительство is neuter, and that affects agreement with adjectives and past-tense verbs.

For example:

• новое правительство = the new government
• правительство изменило = the government changed

There are exceptions in Russian, but -о is a very common neuter ending.

It actually does have the expected form: правило here is in the accusative case, but for this noun the accusative looks exactly the same as the nominative.

Russian uses cases, and direct objects usually go into the accusative.
However, for many inanimate neuter nouns, the nominative and accusative forms are identical.

So:

• nominative: правило = rule
• accusative: правило = rule as a direct object

That is why you see:

• Правительство изменило правило.

Even though правило is the direct object, its form does not visibly change.

The sentence uses the most neutral Russian word order:

• Правительство = subject
• изменило = verb
• правило = object

So it is basically Subject–Verb–Object, like English:

• The government changed the rule.

Russian word order is more flexible than English because case endings carry a lot of the grammar. That means other orders are possible for emphasis, such as:

• Правило изменило правительство — grammatically possible, but now it sounds like the rule changed the government, because the first noun is being interpreted as the subject.
• Правило правительство изменило — can be used in special contexts to emphasize the rule, but it is much less neutral.

So for a simple statement, Правительство изменило правило is the standard, safe order.

Изменило comes from изменить, which is perfective.

Russian verbs come in aspect pairs:

• изменять = imperfective
• изменить = perfective

The perfective aspect presents the action as a completed whole: the rule was changed.

So:

• Правительство изменило правило. = The government changed the rule. / has changed the rule.

If you used the imperfective instead:

• Правительство изменяло правило.

that would suggest repeated action, an ongoing process, or a less clearly completed event, depending on context.

In a simple one-time completed event, изменило is the natural choice.

It can mean either, depending on context.

Russian has a past tense, but it does not distinguish between English simple past and present perfect in the same way.

So:

• Правительство изменило правило.

could be translated as:

• The government changed the rule.
• The government has changed the rule.

The surrounding context tells you which English translation sounds best.

Russian does not have articles like a, an, and the.

So Russian simply says:

• Правительство изменило правило.

and English adds articles based on context:

• The government changed the rule
• A government changed a rule
• The government changed the rule

In most contexts, the government and the rule are the most natural translations, but Russian itself does not mark that distinction with separate words.

A helpful stress guide is:

• правИтельство
• изменИло
• прАвило

So the full sentence is pronounced approximately like:

• pra-VEE-tyel-stva iz-mye-NEE-la PRA-vi-la

A few notes:

• Russian в sounds like v
• Unstressed o is often reduced in pronunciation
• The stress matters a lot in Russian, so it is worth learning each word with its stressed syllable

A more careful stress marking version is:

• Прави́тельство измени́ло пра́вило.

It can be plural:

• singular: правительство = government
• plural: правительства = governments

Examples:

• Правительство изменило правило. = The government changed the rule.
• Правительства изменили правила. = The governments changed the rules.

Notice that in the plural, the verb changes too:

• изменили = plural past tense

Yes. Изменить / изменять often means to change or to alter, but in other contexts it can also mean to modify or to amend.

For example:

• изменить правило = change a rule
• изменить закон = amend/change a law
• изменить план = change a plan

Be careful, though: in some contexts изменить кому-то can mean to be unfaithful to someone / cheat on someone. That is a different pattern and meaning.

In your sentence, with правило, it clearly just means changed the rule.

In this sentence:

• Правительство is in the nominative case because it is the subject.
• правило is in the accusative case because it is the direct object.

So the structure is:

• [Nominative subject] + [past-tense verb] + [accusative object]

Even though правительство and правило both end in -о, they are not in the same case here. Their grammatical roles are different, but the forms happen to look similar because of the noun patterns involved.

Yes, you could, and it would also mean The government changed the rule.

However, there is a slight nuance:

• изменить often sounds a bit more formal or neutral: to change / modify / alter
• поменять often sounds a bit more conversational: to change / switch

So:

• Правительство изменило правило sounds very natural in formal, official, or neutral contexts.
• Правительство поменяло правило is also understandable and natural, but a little less formal in tone.

With things like laws, policies, or official rules, изменить is often especially appropriate.