What?
"A stakeholder is any person or representative of an organization who has a stake - vested interest - in the outcome of a project. A stakeholder can be an end user, a purchaser, a contractor, a project manager, or anyone else who cares enough or whose neeeds must be met by the project."
Rational Unified Process, The:, An Introduction Addison-Wesley 2003.

The above quote from the Rational Unified Process (RUP) seems very succinct, accurate and comprehensive. Therefore, for the purposes of this website it is the de-facto definition.

Why?
The concept of the Stakeholder is an important one for software development. Software is developed to meet someone's needs. Except in the most trivial of developments, those needs have to be analysed into requirements, coded into executables and then tested.

The sheer range of activities mean that more than one person has an interest in seeing the project succeed. They need to be recognised and their input and outputs co-ordinated. (Cynically in the real world, we see people, who have a vested interest in the project failing.)

Vested interest also has an element of risk for the stakeholder. The more stakeholders there are, the higher the risk if the project fails. For this reason it is advisable to keep the amount of stakeholders as small as possible. (And not by ignoring them as such.)

Who?
The listing in the quote above is not exhaustive. The phrase "vested interest" is the operative word. Anyone who has a conceivable interest can be considered a stakeholder.

When?
In a typical Waterfall environment stakeholders would be identified at the start of the project. This information would be left in a dusty binder, never to be seen again. As everyone has to be on board at the start, waterfall projects tend to start with very large teams. Consequently very large numbers of stakeholders. The number of vested interests means that risk very high.

Idenitification of stakeholders now becomes part of the risk management process.

Proponents of the RUP and other iterative frameworks paint a different picture. As the early phases are only to prove the business case, the number of stakeholders is small. As the project continues, confidence grows. More people are taken on such as developers and more testers. However this is done in the knowledge that the prncs unlikely to be cancelled.

In an iterative development, identification of who the stakeholders is an ongoing process. For instance at the start, people involved are the business decision makers. At the end, when the product is being implemented, end users further down the business take on a much higher profile.

How?
"Stakeholders" should not be seen as a homogenous group. At anyone time the project will have a group of stakeholders. The interests will be different, as will their input to the project.

As the project moves on the group invariably tends to grow. However it must be noted that the make-up of the stakeholder group nor their motivations remain constant.