The Swiss Travel Pass map shows the pass works as far as Tirano. It won't get you all the way to Stresa, but fares on Italian regional trains and buses are very low, so it's just a matter of buying inexpensive tickets to cover the trips within Italy. I don't know whether there's a lake boat going all the way from Locarno to Stresa. There may be, but it seems as if that would be a long ride. I rather think there are Swiss boats serving the Swiss part of the lake and going as far south as Brissago and Italian boats working in the southern portion. However, there's a very worthwhile rail option; see below.
I have stayed in Lugano two or three times but have only passed through Locarno. All my visits were more than 20 years ago, but at that time I preferred the liveliness of Lugano. Locarno felt more like a staid, old-line resort town. However, there are a couple of really great day-trips from Locarno. They're manageable even if you're staying in Lugano, but they'd be more convenient from a base in Locarno. I am speaking of the Centovalli rail trip between Locarno and Domodossola, Italy, and the Postbus run up the Valle Verzasca in Switzerland. Both trips are covered by the Swiss Travel Pass.
I see there's an Italian rail link between Domodossola and Stresa, so you could take the very scenic Centovalli train (free with the STP) as far as Domodossola, then pick up a cheap Italian train for the rest of the trip. Italian rail schedules can be found at https://www.trenitalia.com/en.html. The Domodossola-Stresa trip takes about half an hour, and the service is fairly frequent, at least on weekdays; I didn't look at the weekend days.
The Centovalli schedule can be found on the Swiss SBB website: https://www.sbb.ch/en/home.html. There are six direct trains each weekday taking about 2 hours. Again, I didn't look at the schedules for Saturday and Sunday.