Here is how I understand the theory. In order to completely understand and resolve the state of stress at some point in the earth's crust, there are nine componants to consider. Three of these are normal stresses, and six are shear stresses. The concept of principal stress helps simplify this understanding. By definition, all states of stress include three mutually perpendicular normal stresses, which are refered to as sigma 1, sigma 2, and sigma 3. Principal stresses are perpendicular to principal plains, where are defined as a plane where no shear stress exists. The Earth's surface is a principal plane because it is a free surface, and thus can't support a shear stress. This means that one principal stress is always vertical, and the other two are perpendicual to it and in the plane of the Earth's crust. Sigma 1 is defined as the greatest compressive stress, sigma 2 is the intermediate stress, and sigma 3 is the least principal stress.
Refering to structural geometries in terms of principal stress orientations provides convenience of understanding. Here are some general statements that can be made. In normal fault systems, sigma 1 tends to be vertical, or cleavage tends to form in the plane of flattening, which is perpendicular to sigma 1.
If this doesn't answer your question please feel free to private message me.
Perhaps to put what David has said (very well) in another way - rocks are subjected to forces that act on them and these forces cause strain (which is change in shape and volume of the rock). We never see stress, we only see the effect it has had on rocks (strain). Stress has the same units as pressure (force per unit area). In the simplest case, we could think of lithostatic load (because of the mass of the overlying layers in horizontal rocks, and gravity) as being an increasing pressure on each layer of rock that varies with depth (increases with increasing depth. Pressure is a simple case of stress, but stress is more than that, it can vary with the direction and with the surface it acts on. We can have normal stress that is the stress that acts normal to a surface - it can be a compressional stress (acts to shorten an object ) or a tensile stress (acts to lengthen an object), or shear stress that acts parallel to a surface. A special case is hydrostatic stress (equal in all directions), which is usually compressional - it can change volume but not shape. As David says, stresses acting on a rock can be resolved into three principal stresses, one of which is vertical. The surfaces of maximum shear stress are failure surfaces (i.e. faults) that deform by shear strain and they will have an orientation that depends on the magnitude and orientation of the stresses. If the greatest principal stress is vertical, then normal faults result - to get a reverse fault or a transcurrent (strike-slip) fault the maximum compressive stress must be horizontal and which fault forms depends on whether the minimum compressive stress is vertical (reverse fault) or horizontal (strike-slip). Cleavage such as axial planar cleavage commonly forms perpendicular to the maximum compressive stress (however shear cleavage commonly forms at a large angle to the shear surface). Remember however that the conjugate angle between potential fault directions will tend to continue to vary as stress continues after initial rock failure, and similarly the angle of a shear foliation will rotate closer to parallel with the shear surface with continuing shear. I am repeating what David said, but I find that it helps to hear it expressed in many different ways.
For me, above comments are state-of-the-art. To read a book is different from a comment as comment looks like a discussion/table talk. Of course there is no alternate of a comment made by a researcher. Many thanks to researchers (above) and still waiting for researchers to have knowledge from their comments.
David Malone and Martin James Hughes many thanks for the wonderful explanation. Three years after, your explanation is helping me to resolve some intricates regarding stress positions explaining the deformations we have in the field.