Can you explain how the present state and next-state was decided? Also, how would the present state look if it was 1011 instead of 110 sequence? How was the output decided (like when do we decide 1 or 0 for the output). I tried looking it up but they don't follow the same format as this.

A Mealy sequential network has one input and one output. When the input sequence 110 occurs, the output becomes 1 and remains until the sequence 110 occurs again at which time the output returns to 0. The output then remains 0 until 110 occurs a third time, etc. Thus the output is complemented every time the sequence 110 occurs. Derive the state graph and demonstrate that your solution is optimal in the sense of having a minimum number of states. Assume initially that no inputs have been seen