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I wanted to confirm what is the link of order status to order state..?
Means if i link multiple Order status to order state e.g. to Processing, what does it mean?

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An order state can have multiple order statuses, whereas one order status is the default of one order state.

You can check out the Order States and Statuses here: System > Order Statuses as shown in this picture:

Magento CE 1.9.2.0 Order states and statuses

Standard order status as of Magento CE 1.9.2.0 (see table sales_order_status) are:

  • Canceled
  • Closed
  • Complete
  • Suspected Fraud
  • On Hold
  • Payment Review
  • PayPal Canceled Reversal
  • PayPal Reversed
  • Pending
  • Pending Payment
  • Pending PayPal
  • Processing

The order statuses are already explained in detail here: https://magento.stackexchange.com/a/516/231

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