Soundstage is a difficult one and and none of the explanations so far seem to satisfy me so I will also attempt to define it. It, to me, is the merit of how close we can get to reproducing an actual stage filled with musicians , through sound reproduced by means of electrical amplification.

In doing so, you need good and accurate stereo separation. Say we have some cellos on the far right of the stage , o soprano in the middle and some Violins on the left. In reality , where you are sitting in front of that stage , your ears will be able to pinpoint each sound source even with closed eyes. Can we achieve the same ? That's stereo separation.

And then there is depth, now let's put some rows of flutes behind the vocalist, while they are all roughly grouped in the center the ones behind will be slightly quieter to you since they are farther. To reproduce this you will need a good dynamic range, to be able to meaningfully reproduce very subtle level differences. Also with great dynamic range you will be able to hear incredibly quiet stuff, like musicians breathing, clarinets clicking, fingers moving on strings etc.

Also you need good tonal fidelity that all the sounds and relevant timbres actually sound like the real thing.

Add to that adequate amplification so that we can push exact same sound pressure levels all the way to you, as if there was a stage in front of you and VOILA , we have created a good soundstage.