Stain is a wood colorant that is similar to paint. It consists of pigments or dye, combined with an oil-based or water-based solvent and a binder. Stain adds a shade of color to wooden furniture, floors, doors or decks. Thereby, it usually retains the appearance of the natural grain of the wood or even enhances it – especially if the color of the stain matches that of the wood.
These characteristics sets stain apart from color paint or lacquer which are cover the original texture. One of the downsides, though, is that a coat of stain on its own does not provide much protection to the wood.
Therefore, a stain is typically used in combination with a more durable colorless finish. For instance, you could treat a piece of wood with a color stain and apply a coat of Polyurethane or colorless lacquer afterwards to achieve both the intended color and the resistance needed. Note that it is often recommended to use a conditioner, sealer or shellac before applying a stain. This helps avoid blotching, in particular for pinewood (source).
The main difference between oil-based and water-based stain is the type of binder that is used as an ingredient. Read on to learn more about this and the characteristics of each type of stain.