What makes a Northern state a Northern state and what makes a Southern state a Southern state?

The twin centres of the early USA were Virginia and the various states of New England.  States north of Virginia tended to find more in common with New England.   The big polarising factor was slavery, which was abolished in most states north of Virginia, while growing south of it and maintained and defended by Virginia.  (Though even this was complex, Maryland partly looked to the south and so did New York.)   The formal separation is mostly the http://en.wikipedia.org/wiki/Mason%E2%80%93Dixon_line, between http://en.wikipedia.org/wiki/Pennsylvania on the one side and Maryland and Virginia on the other.  Pensylvania was founded by Quakers and kept strong anti-slavery views.

The socio-economic histories are entirely different.  The northern states never had the same sort of staple crop plantation style agriculture that the southern states did.  Sure, there were large, oligarchical land holdings in New York and Pennsylvania, but monoculture was never part of it, and the systems were more like a lighter version of European tenant farming than, well, what developed into race-based chattel slavery in the South.  Most of the North was engaged in yeomanry and household manufacture which went large scale and commercial in the early 19th century.  In general the North was more mercantile.

Technically the Mason-Dixon line determines which states are considered Northern or Southern.