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Beef stew meat usually consists of scraps that the butcher trims off of better cuts of meat, or meat from the chuck (shoulder) or round (rear) of the cow which aren't really good for anything else, but don't contain enough fat to be ground into ground beef. When cleaning up a steak he would have waste that would otherwise be thrown away but it is still good meat which could be eaten, so they decided to throw it in a stew.

Stew meat does not have enough marbling to be eaten medium or medium rare or anything less than well done, which is what differentiates it from a steak. You've probably had tough beef stew meat. That is meat which hasn't been cooked long enough. Stew meat should be cooked for hours and hours in liquid (such as beef or veal stock) so the liquid has time to penetrate the meat and make it tender. Otherwise you end up with a piece of beef as tough as a shoe sole and about as flavorful.

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