Stencil provides a compiler that generates standard-compliant custom elements from components written using its API, making it easier to create reusable web components. It addresses problems with vanilla custom elements by adding features like virtual DOM, reactivity, JSX and TypeScript support. Stencil components can be used by any framework since the output is just standard web components, avoiding issues of framework coupling. It also helps create sharable infrastructure components and enables building microfrontends with shared behaviors across applications.