how are stablecoins better than just plain ol' bitcoin?

They're not better. They're fundamentally different.

How do they keep the value at $1 USD?

That's the secret. They don't. All we have is a said pinky swear. Stable coins are not truely stable.

But what is? USD is not truly stable in terms of its value either.

The difference is that the company promises to pay out dollars at a fixed ratio for their stable coins.

That means the price theoretically can't fall below that price (because if the value was below the fixed ratio people would just not trade the coin but instead sell it back).

They also pay out the coin in exchange for real money at the same value, which stabilizes the coin against raising in price.

This promise usually only holds until people withdraw too much and it turns out the company doesn't actually have the financial backing they claim to have.

But in theory stablecoins are closer to paypal credit than to bitcoin. You can exchange €1 in cash for €1 in paypal credit and you can exchange €1 in paypal credit for €1 in cash. So the value of paypal credit doesn't go up or down.

Bitcoin has no such promise. Bitcoins are just traded between users, so the value can go up or down. So if you are lucky you get rich, and if you are unlucky you end up broke. That's why Bitcoin and similar crypto works OK as a kind of large scale online casino, but not exactly as a currency that you want to receive your wages in.

But as with any crypto, stable coins are also worthless crap backed by some randos that you have to blindly trust.

Would you put your money into a "bank" account of a "bank" managed by an anonymous guy who swears he's legit?

Stablecoins are not better, they’re different.

If you’re on a trading platform, you have a cash account. You use the cash account to buy stocks, options, etc. When you sell these, they credit your cash account. You only actually get the money if you cash out your account, which most people who are actively trading don’t because it takes time to transfer out.

Stablecoins are like cash accounts for crypto. You can use them to buy and sell coins like Bitcoin or Ethereum. Then you can eventually cash them out, which takes more time.