In state counselling merit list will be produced only of that particular state.

Like for example Karnataka conducts exam called as KCET for undergraduate course.

Then the merit list will be formed only of Karnataka students.  And seat will be allotted based on rank and preference.

All India counselling

For Exam like JEE,  NEET all India rank is made.

And you are ranked among all the students in India answering the exam.

Counselling will be done centrally