Consider a machine that has two state, i.e., up and down. The probability of it is down on day n+1 when it is up on day n is a, The probability of it is up on day n+1 when it is down on day n is b, where both a and b range in [0,1], and both are independent often past. Let Xn be the state of the machine(0 if it is up, and 1 if it is down).
Then we can plot the state transition diagram as follows:
The one-step and n-st