As an American, I’m equally confused. I will say that based on my experience, the tristate areas I often see referred to are around New York and Philadelphia.
Tristate is used in things like radio where you are covering 3 states. "Here is the news/weather in the tristate area". They mean specifically the 3 states that the radio signal reaches, which is clear to everyone. Since they reach 3 states there is no other name that can be used for their coverage area. The people in question regularly cross state lines.
It isn't a useful concept to bring up when you are not physically in a tri-state area.
For reference though, the term actually doesn’t refer to anywhere specific, there are many tristate areas, https://en.m.wikipedia.org/wiki/Tri-state_area