Stay stitching is normally done a tiny bit in from the edge of the fabric, about 1/4" or so. It will be hidden inside whatever neck finishing style (bias binding, stretch binding, facing) you use. It is to stop the edge, which is cut on various biases due to its shape, from stretching out of shape while you work with it.

Actually most patterns say the stay stitching should be just inside the seam line - like at 1/2" or so.