PlayerState is used to replace PlayerController in network replication for all clients so it is exist through out the level with PlayerController and it use use to store the variable that matter even if your character is not there or dying like score, level, kills, deaths, character type/class,…
Anything that define of your character you can put in like health, mana, energy…
For example in MOBA game, your should put level in Playerstate, coz when your character die, all the stat in character will be reset, so you still can grab the level from Playerstate and re-init your character base on level, same go with items, weapons. In case of disconnected and reconnected, PlayerState will be saved, and your can get back all of that when player reconnect to server.