Need to understand Execution States better

In Manage Project Properties->Execution States we have selected only Passed, Failed, and Blocked. In a Test Case Execution Record, we are seeing Passed, Failed, and Inconclusive, with Inconclusive offering a pull down list showing Blocked, Inconclusive, Error, PermFailed, and Deferred. We were expecting to only see Passed, Failed, and Blocked as State options. Can someone explain what is going on here? Do execution states only apply to a different area or different record types?
Passed, Failed, Inconclusive image
http://imgur.com/a5qXiiz
List of states under inconclusive
http://imgur.com/TfLb9V5
Passed, Failed, Inconclusive image
http://imgur.com/a5qXiiz
List of states under inconclusive
http://imgur.com/TfLb9V5