A stable coin is a dollar, but on the blockchain.
Lets take USDC. Its issued by Circle. You send them one traditional USD, they send you one USDC to your wallet. You can use that USDC in crypto infrastructure, loan it out and earn interest.
As a non us citizen, you may buy some using say ether, in order to hedge the inflation of your local shit fiat. Or you may sell your crypto holdings into it if it looks like the market is headed off a cliff.
USDC is not decentralised, it requires trusting Circle. Circle can arbitrarily freeze your USDC at any point. Circle holds the collateral as cash in US banks. It publishes audits from the big 4 monthly. If there is a bank run on USDC, Circle allows anyone to redeem USDC for USD, as long as its during trading hours. Circle makes its money from the bank interest it earns on the collateral.
So thats how centralised stable coins work.
Crypto has a dream of creating decentralised stablecoins. These would track a target value supplied by an oracle network (decentralised network that can agree on some data outside the purview of a blockchain. There have been a few designs for these. Generally they require large collateral ratios (like 400-600% if using ether as a collateral) which is capital inefficient. Or they try some other idea that leads to blowups like Terra Luna / Do Kwon. There are other interesting models such as ampleforth.
Anyway until the law allows it I doubt wee see a large uptake of crypto for peer to peer payments in the Western world. But there are plenty of onchain financial uses.