Sweet iron is likely not pure iron, but a mixture of iron and carbon combined to create some form of a carbon steel. Bit makers claim that it tastes sweet to the animal and therefore keeps the animal's mouth moist. In my own experience sweet iron does not seem to cause extreme amounts of salivation, but this no doubt varies from equine to equine. Whether sweet iron tastes good or bad, sweet or bitter, is academic. The truth may never be known.
Stainless steel is a steel alloy containing chromium and nickel.
Stainless steel is widely used in the medical profession to make pins and other parts that are implanted into the human body. Since it is non-reactive, it has no taste caused by electrolytic reactions and is considered a safe metal to be in contact with living tissue. Aluminum is not an inert metal. Chrome-plated bits are not reactive, as long as the plating is intact on the whole surface of the mouthpiece. Plastic bits are now available.