Statehood refers to the legal entity within the United States that can send representatives to Congress. They are different than territories, dependencies such as Guam, and federal districts such as Washington D.C. Statehood is granted by the U.S. Congress.
States send representatives to the Senate and House of Representatives, can draft a state constitution, and must manage all its own affairs, such as establishing state courts, public education and an executive branch within the state. The process of becoming a state often requires a minimum population, which is set by Congress, and the state must prove that a majority of its population wants to become a state. Congress either accepts or rejects the state based on whether or not it believes that the addition of that state is beneficial to the country as a whole.