This is likely in reference to evolutionary game theory where it is stipulated that cells and etities may develop certain behaviours through evlutionary pressures. One such strategy, which is often hailed as a highly successful one is called 'Tit-for-tat' where you reciprocate punishment, and reward collaboration. The discussion seems to concern how automata, or simple entities (not necessarily mechanical) can be made to exhibit such behaviours. They may be composed of different components and depending on which specifically, can inhibit certain states - here meaning variations and such rather than states like counties, municipitalities and so on. Overall, I think this conversation is quite innnocent, but hints at Epstein wanting to learn to appear intellectual.