IANAL, but I believe it means that the company can't be headquartered somewhere else.

In terms of a pure DAO though that's a weirdly nebulous distinction. Before incorporation they're nowhere legally speaking, there's not a single physical location it's operating out of.

Maybe like others have said it's mostly about otherwise extant orgs not being able to register.

> What does that even mean for a DAO to be out of state?

A Delaware corporation doing business in California must file as a foreign corporation in the latter. It sounds like Wyoming is saying a DAO can't incorporate out of state and take advantage of the Wyoming DAO LLC, but this doesn't appear to have been fleshed out.

I think the more interesting question is what does it mean for a DAO to be considered in state to qualify for this type of LLC? Do they need to keep at least a PO Box as presence in the state? Some amount of real estate? Some number of state-resident members with voting power? Do the other usual LLC requirements apply?