State machines are used to design both computer programs and digital logic circuits. They seek to reduce system complexity by breaking down the behavior of processes into manageable states and transitions. Each state represents a particular condition or situation of a system at a specific time, while the transitions represent the movement from one state to another, typically triggered by events or conditions being met. They can be deterministic (where each state has a specific action for each possible input) or nondeterministic (where a state can lead to multiple outcomes based on the same input).