APY stands for Annual Percentage Yield. This measures the real rate of return on your principal tokens amount by taking into account the effect of compounding interest. In the case of STASH, your $STASH tokens represent your principal, and the compound interest is added periodically on every Rebase event (Every 15 minutes).
Your new principal amount is then equal to your current $STASH token amount, plus your new rebase token amount. This total amount is what gets calculated for your next rebase rewards.
It is important to note that your balance will grow not linearly but exponentially over time. This is the power of Compounding Interest.