They are states now, but them they where actual colonies, something similar worked like this here on brasil during the colonial times, where the portuguese divided all of the territory they holded here on 16 different goverments called “hereditary capitanies” that where basically big pieces of land gived by the king to nobles and viceroys so they could administrate it better. The same thing worked on the US, where they divided all of the coast on thirteen territories so it could be better administrated, and still be decentralized enough so the colonies would not rebel, it eventually failed as the colonies would rebel against the british because of the extreme taxations and comercial laws that the british goverment imposed on its colonies. The stars do represent the states, as the original US flag only haved 13 stars, and the stars ammount only got bigger as the US started to steal more and more territory from the natives and the mexicans. But the stripes aways where an representation of the first 13 colonies and where even used by the colonial US flag that haved the Union Jack on it.