Stem cells are undifferentiated cells that can self-renew and differentiate into specialized cells, functioning as a repair mechanism in the body. There are two main types of stem cells: embryonic stem cells derived from 4-5 day old embryos, and adult somatic stem cells found in tissues. Induced pluripotent stem cells are specialized adult cells that have been genetically modified to function similarly to embryonic stem cells and differentiate into other cell types.