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State represents a situation or a phase of an item. For example a Car might be in state Damaged and then move into a state Repaired through a transition named Repair.

As an example imagine a workflow for buying 3D prints (read here). It starts with getting a price quote from the printhouse and ends with the print posted/sent out. The item in this case would be Printout and during the workflow it has four states: (Price) Requested, Offer made, Paid and Shipped. During a transition from state to state attributes can be set.

Item attributes evolving over the course of the workflow

The order of the states can be set by moving them around as depicted here: