The phrase “state of the art” is probably Victorian in origin. At this time there was great concern that Great Britain must continue to advance technologically. Subjects such as mechanics were quickly becoming arts in themselves, hugely intricate mechanical machines were being constructed and constantly refined. The term “state of the art” referred to the average state the “art” was in. A state of the art steam engine would be a fairly average machine.
Since then “state of the art” has come to mean the top of the line of technology. It does not always mean the absolute cutting edge but rather, the most advanced technology available to the general public. A state of the art computer will be a very high specification model, but not necessarily a super computer.
The term phrase was first used in this context in around the 1960’s.
Sources: Own knowledge, www.quinion.com and p104 of “Lock Stock and Barrel II.”