These are the first steps do to when designing a finite state machine. They allow us to determine how many states are needed and which transitions are possible from one state to another.
First we define a starting state, this is the state that the circuit should enter when power is turned on or when a reset signal is applied. After that we define the other states of the circuit. The following diagram is from a example in the book, and it shows all the possible states of the circuit and the triggers that changes them to another state.
The state table is a more formal and readable way of describing the changes in the state of the circuit:
