In a free country, everything which is not forbidden by law is permitted.
In a police state, everything which is not permitted by law is forbidden.
A police state is a society that is characterised by a great amount of state control over the everyday lives of the citizenry. Civil rights are limited. Police states have well-developed surveillance networks and intelligence agencies that monitor the citizenry, and secret police forces that use the information thus gained to prevent dissent or disagreement with the government. Detention without trial and other strong police powers are present.
This is however the everyday state of affairs, unlike the temporary measure of martial law or state of emergency. However, phrases like "temporary state of emergency" can become elastic euphemisms in police states – for instance, South Africa during apartheid had a country-wide state of emergency that lasted from June 1986 to June 1990, and Egypt has had one on the go for most of the time since 1967.
Unsuprisingly, these states are generally not democratic, and prefer political obedience over open debate. Police states are often totalitarian, or even Orwellian or Stalinist.
A sometimes-voiced idea is the principle that the surveillance and laws are not intended to arrest every wrongdoer, but to have sufficient grounds to arrest any citizen, should the desire arise.
The former Republic of East Germany was a good example of a police state. See also North Korea.
See also the milder term surveillance society or surveillance culture, where the modern observation techniques such as CCTV are used to cut down on crime, but do not infringe much on political democratic liberty. Or so they say.