The stencil is a thin mask, usually metal, used for applying solder paste to the PCB pads. It isn't often used for home construction but with the increasing difficulty in hand soldering ever smaller devices it is starting to be used for prototyping. You need a reflow oven, but some cheap toasters can be coaxed into providing that service. Have a look at PCB-Pool's web site - they sell a reflow kit. Also Dan Strother's blog (I think that is how it is spelt - try google.)
Keith