All searches are radius driven. When you select a state, country, city, province, etc. Google translates that to a geographic point in the middle.
Our search then reports back all locations that are within X miles/km of that point.
The plugin, at this point in time, is not designed to report by states, territories, etc. We may add that to the enhanced search premium add-on at some point. You can simulate this functionality by using tags and the search-by-tag feature if you require "report only locations in this state".
The philosophy is that most users will want to know the places closest to where they are or where they will be. If I am standing on the border of state/province X I don't really care if the place I am looking for is only 500 feet away but happens to be in state/province Y. I understand that there are sales/marketing territories and other considerations, but the original design philosophy was not based on that. Now that the primary radius-search is well developed the territory based search features can be considered & implemented over subsequent releases.