California has the constitutional right to regulate commerce within its borders. When a California resident in California signs up for a service, even a service provided by a company in another state, California law applies.
In this case particular case, California exceeded its constitutional bounds by passing a law that claims to regulate commerce nationwide. Whether or not you agree with that, the exemption order that my company received proves the interpretation.
Either way, Dwolla is not registered as a money transmitter in California, has not applied for a license, is doing business with California residents in the state, and is in violation of the law as a result.
New York used to have a physical presence requirement as part of its money transmission statute; those companies without a physical presence in the state were not required to obtain a license. As of September 30, 2011, that changed: all money transmitters with New York customers must obtain licenses, whether or not there is a physical presence. With the advent of the internet, states are realizing that "presence" does not necessarily have to be physical in order to claim tax revenues or license fee revenues.