State regiments are raised and equiped by a single state, the continentals by the congress.
The State regiment job was to defend the home state and it was difficult to get them to fight elsewhere. Being regulars they got far better training than militias. But they took valuable resources away from the real regulars, the Continentals. One of the most famous state units are the Maryland Independent companies. The 4th is shown in every AWR uniform book.
The continentals are raised in the states following a quota system, fixed by congress. Most had state names, a little confusing, the Maryland Continental Regiment was a Congress unit, no state one.
Congress owned two special Infantry regiments, the 1st and 2nd Canadian Regiment. Raised from foreigners, not only Canadians.
I used the 4th Maryland Independent Company in hunting shirt. I added a unit of Maryland State troops in the more regular uniform that can double as a continental unit. And the 2nd Canadians as elite continentals. Not to forget the Militia.