To design a 16-state counter using 5 JK flip-flops (FF), it's clarified that 4 JK FFs can only count up to 15, necessitating the use of 5 for full 16-state functionality. The discussion includes a query about implementing the counter with a 74LS194 shift register and a 27C256 EEPROM, emphasizing that shifting from the register is not allowed. Participants seek clarification on the "do nothing" option of the 74LS194, which allows the counter to maintain its current state without shifting. Understanding the operation of the shift register is crucial for correctly implementing the desired counting sequence. The conversation highlights the technical challenges and requirements for creating a specific counting sequence using digital components.