A stub article is any article in Wikitravel that does not address its subject sufficiently to be useful for other travellers.
In general, stub articles are short articles. Subjects worth having an article about usually are worth writing at least three or four paragraphs about. If there's less text than that, either the subject is not covered fully, or it probably doesn't merit its own article, and should be incorporated into another one. See What is an article? for details on what deserves its own article on Wikitravel.
Length doesn't guarantee completeness, though. An article can go on for pages and pages and still not cover its subject with the appropriate depth or breadth. Such an article would still be a "stub", even though it's not particularly stubby.
Pros and cons of stubs
Stubs have their bad sides. Readers can get confused by a too-short article: Is that all there is to say about the article? Is that the expected length of articles for Wikitravel? Where's all the info? Stubs can give a bad first impression if people haven't seen other Wikitravel articles. (But see below for a way to make stubs less confusing.)
Mostly, though, stubs are a good thing. A stub is the seedling from which the full plant of an article emerges. One Wikitraveller can add a stub, and other Wikitravellers will come along and add more information to it. Someone else comes in and reformats the article according to the Manual of style, and someone else adds photos. Eventually, the tiny one-sentence stub becomes a healthy, useful article.
If you set the Threshhold for stub display value to something other than 0 in your preferences, links to stub articles will be shown in a different color than links to complete articles or to non-existent articles. The threshhold value is a number of characters in the article; somewhere around 500 characters should give you a good idea of whether an article is long enough or not.
Note that this only shows short articles, and so it's a rough approximation of stubbiness. Some articles may need additional information, even if they stretch for hundreds of thousands of characters. We don't have the software yet to decide if an article covers its subject well.
If you make a stub article, or see one that someone else has made, it's good to add a little disclaimer that says that the article isn't done yet. It gives a bit of extra impetus to readers to add what they know to an article. The standard stub article disclaimer looks like this:
...which comes from the following Wiki markup:
You should be able to just copy-and-paste the above markup into a page -- preferably at the bottom. This reassures readers that we know the article is not complete, and that it's not indicative of the overall quality expected out of Wikitravel articles. Also, it invites them to add whatever they can to make the article better.
Best of all, other Wikitravellers can use the What links here feature on the Wikitravel:Stubs needing attention page to check for new stubs needing attention -- although it'd be preferable if you did that when you first detected the stub.
It can help very much if you copy the appropriate article template to the stub article. For example, if the stub is for a region of a country, copy over the region article template. People are more comfortable if they can add just a little information at a time, rather than writing the whole article from scratch.
Taking out stub disclaimers
It can be hard to tell when an article is no longer a stub. An article doesn't have to be perfect to take the stub disclaimer out of the article -- just relatively complete. Would the article be useful if someone was trying to visit the city or country it covers? Then it's probably not a stub any more, and the disclaimer can disappear.