A region is a part of a state machine or composite state. It contains (encloses) vertices and transitions. It can have one (and only one) initial pseudostate and any number of final states. A composite state with one region is called a non-orthogonal (simple) composite state and one with two or more regions is called an orthogonal state.
Explanation
A region is a type of grouping mechanism within a state machine. A region is recognizable by a dashed line that separates it from other regions. A state machine or a composite state can contain one or more regions and each region can contain any number of transitions, states and pseudostates. Each region can contain one (and only one) initial pseudostate which marks the starting point for transitions in that region. A simple state does not have regions or substates.
A composite state is related to a region in that a composite state owns (contains) the region. A composite state may have any number of composite states. If it has one region it is called a simple composite if it has more than one region it is called an orthogonal composite state.