The illusion of a three-dimensional space and precisely located instruments produced by a well-set-up stereo or surround system.
Soundstage is the sense of width, depth and height in the reproduced sound — the feeling that the music exists in a space beyond the speakers. Imaging is the more specific ability to pin instruments and voices to defined locations within that space.
Both depend far more on setup and room than on spending: speaker toe-in, distance from walls, symmetry, and a listening seat at the apex of an equilateral triangle do more for imaging than a price upgrade. This is the payoff vinyl-and-valves listeners and stand-mount devotees chase — and it's largely free once you understand it.