This concept is a tricky one but can be explained easily if students see it as a bar graph turned on its side. A good stem and leaf plot shows the first digits of the number (thousands, hundreds or tens) as the stem and the last digit (ones) as the leaf.
Always using topics students are familiar with helps. I've often turned to things students like: bus trips, ice cream, bowling scores. Ending the unit with a game also keeps students aware of place value when it comes to teaching stem and leaf plots.
For extension activities, think of ways to incorporate the measures of central tendency into stem and leaf plot practice. Why not take the data and determine the mean, median, mode and range? Below is a sample of the unit I developed to assist my students in comprehending stem and leaf plots.