State or graph based testing is useful in situations where

1. The product under test is a language processor wherein the syntax of the language automatically lends itself to a state machine or context free grammar represented by a railroad diagram.

2. Workflow modeling where, depending on the current state and appropriate combinations of input variables, specific workflows are carried out resulting in new output and new state Dataflow modeling, where the system is modeled as a set of dataflow, leading from one state to another.

   

In the above case, each of the states (represented by circles) is an event or a decision point while the arrows or lines between the states represent data inputs. This can be applicable when

1. The application can be characterized by a set of states.

2. The data values (screen, mouse clicks) that cause the transition from one state to another is well understood.

3. The methods of processing within each state to process the input received is also well understood.