Stems are isolated multi-tracks, or in other words, a collection of audio sources grouped together. Artists will mixdown separate groupings of key elements such as, drums, bassline, melody, vocals, guitar, synth, etc. that once added together make the full track.
Depending on how the track has been built there can be anywhere from 2 - 30+ stems in a stem file. Stem files give enormous creative flexibility to remixers, collaborators, DJs and live performers.