Delay without Delay()?

...
So, where you write:

if(state==STATE_LED_ON)

the compiler actually sees:

if(state==2)

and you don't have to remember that state 2 is the LED turned on.
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Ahhhh, so the chip counts the number of states and it applies a number to each one for you? I was confused as I didn't see a numeric reference in the upper states, but there were in the lower.