Ok, so the tax is not just charged for your "Home State", for me, NJ, as you have written on Page 47 of your documentation:
"Use Tax Tables – Choose this option if you want the store to lookup the exact tax rate in the tax tables. If you select this option only customers in your "Home State" will be charged tax. To modify, add or import records to the tax table go to your SQL Management Studio and choose the table called "Smith_Tax". "
But actually "Home State" is any set of states that you put in the table. If the towns in NJ, PA, DE, CT, and NY are entered, then if the customer is in any of those states and towns, they get charged tax. If the customer is in Ohio and Ohio isn't in the Smith Tax table then Ohioans don't get charged tax in my example. When I read Home State as it is in the documentation I think only of one state, not a set. A bit confusing, I think.