I don't know why someone down voted you for a legitimate question. I gave you an up-vote to counter.
'usted' is used for more formal situations. Situations where you wish to show respect to the other individual. The less formal version of this would be:
(Tú) Vives en California?
Keep in mind that the pronoun 'tú' is optional here which is why I put it in (). You would include it only if you wanted to stress the word 'you'.
bobmardey, short answer... that is simply how it works.
Longer answer: A while back I did a little digging to find out if there was a reason why. There were a few theories on why many languages developed this way but the one that seemed most plausible to me was this. It goes back to when, to show respect, we would refer to someone in the third person. For example: "Would my lady like something to drink?" or "Would the gentlemen like a beverage?" Notice, I didn't really say 'you' in either case but in both... I was still talking directly to the individual I was asking. Instead I referred to them in the third person. While we don't often talk like that in English anymore, many think that this structure using 'usted' utilizes the third person because of that same forgotten way of speaking.