Finite State Machines (FSMs) control complex sequential behavior by moving through a series of states based on inputs and clock signals. The FSM starts in an initial state, waits for input signals, and then transitions to the next state depending on conditions. In VHDL, this is often implemented inside a process triggered by clock edges, using a case statement to select the next state. The example code shows a simple FSM with two states: IDLE and RUNNING. When the start signal is '1', the FSM moves from IDLE to RUNNING. When the done signal is '1', it returns to IDLE. The execution table traces these steps, showing how inputs affect state transitions and outputs. The variable tracker records the state and input signals over time. Understanding these steps helps beginners see how FSMs manage complex sequences by breaking them into simple states and transitions.