This variable uses the value of $(currentTiddler)$ to construct a unique "$:/state/folded/..." tiddler title, so that the folded/unfolded state of a given tiddler is stored separately. This avoids the problem you are having where changing the state changes the "modified" field of the affected tiddler.
Note that any changes to "$:/state..." tiddlers do NOT mark the document as "dirty" (i.e., needing to be saved). This is defined in $:/config/SaverFilter, via the "-[prefix[$:/state/]]" filter syntax.
However, even though changes to $:/state tiddlers don't mark the document as dirty, the $:/state tiddlers themselves are still saved when you save the document, so that their values are preserved across separate browser sessions.
As of TW5.1.22 (currently pre-release), you can suppress the *saving* of the $:/state/folded/... tiddlers by defining a global variable, $(publishFilter)$ by creating a tiddler (e.g., "$:/config/PublishFilter" -- or any other name you like), tagged with "$:/tags/Macro" that contains:
\define publishFilter() -[prefix[$:/state/folded]]
enjoy,
-e
Eric Shulman
TiddlyTools.com: "Small Tools for Big Ideas!" (tm)