I think I'm understanding this right, but somebody correct me if I'm wrong. Keyword stemming refers to branching out to other keywords from your "root" keyword. So if you had a site about tanning, you could include other keywords like "tanned", or "tanning information."
As mentioned previously, it's using your keyword in multiple different forms to be more relevant on the search engines.
For instance, if you write a page about "The Best Baseball Bat for Hitting Home Runs" and you are targeting "Best Baseball Bat" as your keyword string, you will also want to throw in variations of the stem words like "bats, baseball bats, batting, batting average, bats that hit homers, aluminum bat, home run hitting bat" etc.
By including multiple variations of the stem "bat" or "home run" you you can gather more search engine results since different people search for different variations.