'State' also means to say, or express something (in words).
If you 'understate' something, it means you are describing something as less important or less significant than what it really is.
For example, if the temperature was -20C and freezing and I said "It's a little cool" then I am understating how cold it was. Or if there was a major flood and I simply said, "The river just overflowed a little" then I am understating how serious the flood was. A final example ... If I said Picasso could paint a little bit, I'm understating his accomplishments.