A Finite State Machine is a mathematical model of computation that can exist in exactly one state at any given time. It transitions between states based on defined rules and inputs, making complex state-dependent logic explicit and testable.

Key characteristics:

• Finite states - Enumerated, explicit set of possible system states
• Deterministic transitions - Rules define how and when state changes occur
• Single active state - System is always in exactly one state at a time
• Event-driven - State transitions triggered by specific events or conditions

Example: Order processing FSM with states: Draft → Submitted → Processing → Shipped → Delivered. Each transition has explicit conditions: orders can’t ship before payment processing completes.

FSMs prevent invalid state combinations (like a shipped order that’s still being edited) and make business logic explicit through state diagrams.