The asset statues gives you the option to put a label on the asset to better describe its condition, this can be done when a new asset is identified and when an event is completed. As an example a new asset is labeled In Service, during the inspection a deficiency is found, at the end of the inspection in the Results and Comments section, you can change the status from In Service to In Need of Repair.
Field ID comes with some default statues that you can remove or add to. To remove an existing asset status click on the Archive link. To add a new asset status click on the Add tab. These options are shown in the asset status drop down when adding a new asset or performing an event.