One-hot encoding
Beginner
A way to keep track of which step a machine is on by giving each step its own on/off switch.
Novice
A way to record which step a state machine is on: one flip-flop per step, with exactly one of them set to 1. It uses more flip-flops than counting in binary, but the logic that chooses the next step is simpler and faster.
Expert
One of several state encodings (binary, Gray, one-hot) a tool may choose after it extracts a state machine from the RTL. Re-encoding changes the set of flip-flops, so the equivalence checker must be told the new encoding or check sequentially.
Explained in Logic synthesis (Design Flow).