STM stands for Stepper Motor and is a applied to a new range of Canon lenses which feature a new design of focus motors which, along with a new iris mechanism are designed to eliminate (auditory) noise during video recording.
Canon haven't revealed any information about how the new design works but it's probably the same type of motor used in mirrorless camera lenses. It's a more precise version of a regular DC motor but still has the same direct connection to the lens focus group, which means manual focus has to be implemented using a focus-by-wire arrangement whereby moving the focus ring by hand sends a signal to the motor to move the focus group.
In comparison an ultrasonic motor (like Canon's USM) consists of a pair of concentric rings which vibrate at high frequency to rotate back and forth, an arrangement which permits the user to move the focus ring to directly move the lens element, achieving full time manual focus without damaging the motor.
Stepper motors are better at producing smooth, precise incremental movements, such as those required by contrast detect AF, and AF during video. Ultrasonic motors are better at jumping to the right focus point as part of a phase detection system. See What is the practical difference between phase-detect and contrast-based autofocus?