Two reasons a startup could be in stealth.

First (the most common) is to build buzz, so that when the product is ready to reveal to the world, they can do so with a bang.

You might call this the "big bang stealth" playbook.

If your big bang fails or falls on its face, you're out of the game.

People who are intrigued will hear about it, and set their expectations high.

You'll also not get feedback to help steer development and make sure what you have is viable.

The expectations can become nearly impossible to meet, making it very likely you'll die.

The big bang going well is a miracle.

Another reason to stay in "stealth" is to avoid setting high expectations.

You might call this one the "illegible stealth" playbook.

Avoid having people hear about the thing from Hacker News or TechCrunch.

You can be in "stealth" and be doing things in plain sight, just deliberately illegible.

This allows highly motivated members of the community to fall into the rabbit hole, and decide if what's there is interesting or not.

This allows more capped downside and continuous feedback during development.