As far as I understand it, we think of the valence (conduction) electrons as forming a free electron gas, whose states are occupied as the FD distribution describes. The core electrons are thought to be bound to the atoms they belong to, and don't even have a continuous spectrum of possible states (bound states form a discrete spectrum), so they can't be described with the FD distribution. Well, in principle even the electron gas has a discrete set of states as it is confined to a finite volume, but the spacing between energy levels is very small.