Final answer:
Epidermal stem cells are located in the stratum basale, the deepest layer of the epidermis. They divide to create keratinocytes, which then move up towards the surface to form the protective outer layer of the skin.
Step-by-step explanation:
In the skin epidermis, the epidermal stem cells reside in the stratum basale, which is the innermost or deepest layer of the epidermis. This layer is pivotal as it contains basal cells which divide to form all the keratinocytes of the epidermis. As the newly formed keratinocytes are produced, they initially are cube-shaped and contain little keratin. But as they are pushed upwards, they accumulate more keratin and become part of the stratum corneum, the layer that provides a tough, waterproof barrier for the skin. Additionally, the stratum basale contains melanocytes, responsible for pigmentation, and Merkel cells, which are touch receptors. It is attached to the basal lamina by intertwining collagen fibers known as the basement membrane, and this attachment is strengthened by structures called dermal papillae.