Lip stain is a liquid or watery gel that you blot on your lips; it contains synthetic or natural dyes that stain them. The effect is sort of like if you'd just eaten berries, depending on the color of the stain, of course.
The plus is that it lasts hours, and doesn't come off as much when you eat or drink, though again, that varies by the brand. And I guess it's supposed to look less artificial, as there's no lipstick or gloss visible. The downside is that they tend to be very drying, a lot of them contain alcohol.
I've tried several, I don't care for them. They emphasize every single line on my lips, and make them look parched. I also find them uncomfortable to wear because they're so drying and irritating.
That said, if you wear lip stains or just want to try them, I'd strongly recommend the
Cynthia Rowley Cream Lip Stain that a PP mentioned. It's less drying, so much more comfortable to wear, and I think it's more flattering because it doesn't sit in the lines on your lips. Definitely the best of the lip stains, IMO.