simple question, not so simple answer. but here's the basics
the TC couples the engine to the trans like a clutch/flywheel. if you picture 2 fans facing each other, and you spin one of them (driven by the engine) this causes the other to spin, driving the trans. however, if you stop the trans side "fan" the other side doesn't stop. if it was a clutch the trans would drag down the engine and stall it because they are directly coupled.
also, since the 2 fans sit in an enclosed case and are coupled by fluid, when the engine side spins up to very high speed, relative to the trans, you get a torque multiplication effect (kind of like higher rear gear ratios).
and here comes the fun part...stall. stall effectively means the engine rpm you can reach before the drag of the trans side fan (actually called the turbine) not turning, causes it to stop increasing or "stall" a higher stall allows the engine to get to it's power band faster, meaning you are producing more power at launch. the bad side to high stall is that you lose efficiency at high road speeds and produce more heat. and stall varies on engine torque, not just max torque, but how much being produced at the time you step on the gas. ie it would stall lower due to the lower amount of power produced at 1/4 throttle and higher at full throttle.
you'll also hear about "lockup TC's" these have an internal clutch that locks the 2 "fans" together when cruising (4th gear only, steady throttle, higher speed~40+MPH) this increases fuel efficiency, reduces heat and slightly increases power throughput.