Each entity has a life cycle that has a beginning and an end. 

Let's look at the following real-world example to bring the state modeling technique to life. 

A gift card can have an inactive, active, blocked, or canceled status.

A state model describes the different states that an entity can be in, how each transition between the states occurs, and the conditions that change the entities' states.

A state is described by a name and the actions that are valid for an entity when in a specific state. In some cases, an entity can be in more than one state at a time. 

If we consider our gift card example, the gift card (the entity)'s state is inactive, which means the card cannot be used for transactions but it can be assigned to a particular customer record.

A state transition is the conditions and/or actions that cause an entity to change from one state to another. In our example of the gift card, once the customer registers their inactive gift card on the cardholder portal, the status changes from inactive to active. Now, the gift card can also carry out transactions.

A state diagram shows the entire life cycle of an entity, from its very first state to the last state it can be in. It also shows the direction of flow between states. An alternative way of depicting a state model is to use a table. You simply start with the beginning state, describe the action that transforms the state, and then describe the next state. The last state then becomes the beginning state in the next row of the table.

State modeling is a good technique to apply if a business analyst wants to define business rules and attributes of information.