Answer
Use AND to combine multiple "not equal to" state exclusions, not OR — "state is not Closed OR state is not Cancelled" is true for almost every record (since a record failing one comparison still passes the other), which is why adding more OR-combined exclusions can make the condition show up almost everywhere; "state is not Closed AND state is not Cancelled" is what actually expresses "hide for both of these states," and is the form that behaves as expected when excluding more than one state.