| It doesn't stop|
at the water's edge
In most parts of the world, a state is an actor that has a monopoly on the "legitimate means of coercion" within a defined boundary. These were considered the only important actors in international affairs, but globalization has shaken up the field a little bit. Classic examples of states include Iran, Finland, and (for historical reasons) the United States.
State and nation
A state should not be confused with a nation. A nation is a group of people bound by a common culture, history, religion, language, and/or ethnicity, bound by borders. Many nations, such as the Germans or the French, have their own states as well. However, others do not, such as the Basque and the Kurds. Moreover, it is possible to have a state without a foundation in a single nation, as was the case with many of the African states upon independence. One could also argue that Switzerland, with its four languages and geographical location, could be considered a "multi-national state."
A state that is founded upon a single nationality is called a "nation-state." This was the primary means of legitimacy for states in the past, and many of the most stable still rely on it.
Within some federations such as the United States, the term state also refers to the semi-sovereign constituent subdivisions of the federation. Examples of this usage include Kentucky, Tennessee, and New York. This, more than anything else, has led to the confusion about the terms nation and state within the US.
State and government
In the United States, the terms state (as defined here) and government are used interchangeably. However, in parliamentary systems (e.g., Canada) the government refers to the executive — what in the U.S. is called the "administration." This also leads to confusion, as there is no terminological distinction to be made between the apolitical machinery of the state and the political leaders in the government or administration.