What is Stereo Mix supposed to be used for in Windows?
Solution 1:
"Stereo Mix" is the name given to the output stream (presented as a virtual audio device) after all channels have been combined.
It's a mix of all the channels, and is sometimes referred to (in the past anyway) as "What you hear".
There's usually very little/nothing you can configure about it because it's only job is to present the mixed channels. How much you can configure depends on what was included in the sound adapter driver you're using (as drivers are different, just like sound cards).
If you turn on a Mic's monitor in the recording devices panel (usually by unmuting it, or by enabling "Listen to this device" - again, depends on the driver being used), so that your voice comes out of the speakers, then it will be included in the Stereo Mix stream.
Solution 2:
"Stereo Mix" allows you to make a recording of everything coming out of your computer's audio. So if you were listening to music on your headphones and you were talking into your mic at the same time, you could record both of those at once by utilizing "Stereo Mix".
In a recording application such as Audacity, you would set your source to be Stereo Mix instead of just your microphone.