Imagine a hypothetical action: $$S=\int \left(\frac{\partial}{\partial t}\phi(x,t)\right)^2 d^3x dt$$ Now we have a symmetry of the action: $$\phi(x,t)\rightarrow \phi(x,t)+\chi(x).$$ At time $t$, $\phi(x,t)$ is a function of $x$. But by the transform it can be transformed into any other function of $x$. Does this mean that there is only one state at time $t$ since all states can be related by a transformation?
Compared it with the action: $$S=\frac{m}{2}\int \dot{x}(t)^2 dt.$$ It is invariant under a translation $x\rightarrow x+a$. But we wouldn't say all positions of a particle are the same. (Or would we?)
So I am confused as a gauge transform is not supposed to allow you to transform inequivalent states into each other. (How would you fix the gauge in the first example?)
What I'm mainly confused about is that while a translation symmetry is thought of as a "real" symmetry, gauge symmetry is thought of as a fake symmetry. But I can't see the difference. In the second example I presume one would set an arbitary coordinate system by setting $x(0)=a$ for example. In the first example one would fix $\phi(x,0)$ to be some function.