It is better understood by looking at the two words that first melded into it.
State - another word for a territory occupied by one of the constituent administrative districts of a nation
Stereotyping - A conventional or formulaic conception or image of something; "regional stereotypes have been part of America since its founding
Person 1: Hey where did you say your from again?
Person 2: Oh I'm from New York.
Person 1: The City?
Person 2: No...Upstate New York there are more places then the city you know
Person 1 now kinda looks like an idiot.
Person 2 assures them its just a Stateotype
Person 1: You said your from Maryland right?
Person 2: Yeah how nice of you to remember.
Person 1: So your right by the beach right?
Person 2: No I actually live like two hours from the beach; Not everyone lives on or right by the beaches of Maryland
Person 1 again looks like an idiot in this scenario
Person 2 humbley says, "Your Stateotyping me I see"