What is stateful inspection firewall ?

Stateful inspection technology (a.k.a. dynamic packet filtering) in firewalls refers to the ability to track connection "state information" in addition to simple packet filtering for a more robust security.

What that means is, the firewall has the ability to base control decisions (e.g. whether to accept/reject/authenticate/encrypt/log attempts) based on previous communication with the external host, as well as other applications connected to it. In other words, stateful inspection allows for a more intelligent decision-making than simple port/packet-based access blocking. A stateful inspection firewall has the ability to retrieve and manipulate information derived from all communication layers and from other applications.