See also: Notation#Stances
A stance is anything that changes which moves can be done. This is a broad definition that includes things like rage, dash, and sidestep.
Stances are temporary if they lapse on their own or stable if they don't. Stable stances are more often considered “real” stances.
Stances can coincide with states such as a parry or crush and may have an evasive hurtbox. This is usually thought of as the stance putting the player into those states.
A stance might have a manual transition (i.e. one with no other move attached), optional transition (done with a specific input after certain moves), or mandatory transition (happens automatically when doing certain moves). It could also be forced by an opponent, such as being forced into crouch or back turned.
Generally, stances give the player access to better mixups at the cost of some defensive ability or predictability. For example, Leroy's Hermit Stance (HMT) has a strong plus-on-block mid and two strong lows, but he can't guard, backdash, or step block.
However, some stances, such as Lee's Hitman Stance (HMS) or Eddy's Negativa (RLX) are mainly used for their evasive properties. Their weird hurtboxes make it difficult to start pressure after blocking anything that can transition to them, because the counter-attacks can whiff easily. The most infamous of these is Xiaoyu's Art of Phoenix (AOP), whose manual transition can evade mids almost instantly.