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Magento : Order State and Status in Magento

In Magento, there are two columns in sales_flat_order table.
These are state and status, They both are different. State is used by magento to tell if the order is new, processing, complete, holded, closed, canceled, etc.

while Statuses are the one that YOU would be defining at the backend in System -> Order Statuses. Magento displays order STATUSES and not STATES in the backend order detail page to let you know which status is assigned as per your mapping.

Remember, multiple statuses can be mapped with one state, while vice versa is not possible.

Also you may know more, reading file /app/code/core/Mage/Sales/etc/config.xml

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