Don't quote me but I'm pretty sure it was discussed in my interview that both M3's and M4's are allowed to transfer to another state for rotations. It did seem like it was on a limited basis depending on where you're from. The example they used were med students who originally lived in California. I guess it's fairly common because of the great hospital systems there that can closely follow curriculum guidelines. As far as just wanting to relocate to a new area, I'm not too sure about that scenario.
Yes, thats right students do get an elective rotation and can do this out of state. I do believe we are only allowed one elective rotation though. A few matched M4s i talked to did recommend to do an elective OOS if you plan to apply to residency at that location. (ie if you want a residency spot in california, go do your elective in california).