I've used state machines in the context of hardware design, particularly fpgas and asics. In hardware land, you use a state machine to implement something like

I've used state machines in the context of hardware design, particularly fpgas and asics. In hardware land, you use a state machine to implement something like software, where your circuit is able to remember what happened earlier so it can behave differently accordingly. It's very crude relative to their software counterparts. They are not as common in software because software is one giant state machine already. Variables hold state, there is state within state (classes, composition etc). Sometimes entities in game design have explicit state machines for their behavior but that's to minimize complexity rather than due to absolute necessity