This immediately raises the question of what kind of entity color-of is? To answer this, it is necessary to realize that a class of entities exist in the world which act as relationships between objects--these entities can be referred to as states. States serve to explain how concepts are related to each other by describing the relationships between various concepts. In other words, states form the attributes which are known about an object.
In the Zoo short story, the opening line describes the children as good; good is an object in the world and the relationship between it and children represents a state. The story contains numerous other state examples, such as the spaceship being silver, the visit to Chicago lasting for six hours, and the horse-like creatures being described as small. In each instance, the state descriptions act to ``flesh out'' the object entities which are taking part in the story. That is the purpose of a state entity.
Earlier, the point was made that an object possesses a function; I now further claim that all types of entities possess functions. This includes the state entity. It may seem almost tautological but the function of a state is to act as a descriptive relationship between objects. When I discuss the creative understanding process in detail, it will be possible to see precisely why it is important that all entities possess a function; for now, simply keep in mind that all entities will possess a function attribute.