according to the rule book: "MASTER MONSTERS SUFFER REDUCED PENALTIES WHEN STUNNED."

i dont understand what are the penalties. can someone give an example?

The rulebook's not terribly well organized; the relevant passage is under "master monsters" on page 16 of the JitD rulebook:

"In addition to having enhanced powers, master monsters are less susceptible to stunning. When the overlord player removes a stun token from a master monster, he may either move the monster up to its speed or attack once."

Basically master monsters get a half-action when stunned, just like heroes, but unlike normal monsters, which lose their entire turn, and named monsters, which are immune to stun.

Something that has come up a few times during our sessions, which concerns stunned master monsters. If you hold a Charge or Rage card in hand, will you be able to say take a half-action move with a Rage and so, get a move and two attacks? If you refer to the way Lieutenants work, with the Rage and Charge cards, I'd say yes, you can. Though it seems to go 'very' much against the concept of stun. However, heroes can obviously do the same with fatigue and feats, so in that sense, it's probably not so bad.

Is it fair to assume that Master monsters 'can' actually circumvent the Stun effect through the Charge or Rage card?

I could see it going either way. If you chose to move, you could play Charge. Same thing for Rage, if you choose to attack you could do it. The way stun is written as a series of OR statements makes me lean towards saying you couldn't play Charge to gain movement and then use your granted half action to attack.

Precedent suggests that a stunned master monster with a Rage card could move its speed and attack twice. From the gathered list of answered questions :

If the Overlord plays RAGE on a Lieutenant during a battle action, how many attacks does he receive - 3 or 4?
Two, actually. "Rage" reads: "Play when you activate a monster. That monster may attack twice during this activation (four times if it has Quick Shot)."
A lieutenant who has declared a Battle action may attack twice during his activation. "Rage" has no further effect - it is essentially granting the lieutenant an ability it already has. A much stronger play is to declare a Run action and then play "Rage," which would allow the lieutenant to move twice his speed and attack twice.

Personally, I think it would be a better idea to change the cards so that Rage grants the monster one extra attack during its activation (two with Quickshot) and Charge grants it extra movement points equal to its speed--that way you can use them on stunned masters, but they don't have any greater effects than normal. However, the official word from the designers is apparently to take them exactly as written.

Okay, but does that FAQ example really apply to master monsters and stun though? There's no mentioned of what would happen there with stun since I think Lts are immune to it aren't they since they are technically named monsters (I think, might be pulling that one out of thin air)?

Stun is not specifically mentioned in that answer, but I think the reasoning is pretty clear: Rage lets a monster attack twice even if the number of attacks it would otherwise receive is zero. If you can do it for a Run, I don't see why you couldn't do it for a movement half-action while stunned, whether Lieutenants specifically are immune to Stun or not. Such differences as exist in the wording between running and stun actually seem to make the Rage easier to justify in the case of stun, since the rules say that a hero that runs "cannot attack," but the rules for a stunned master monster merely say that you can choose to move or attack, and do not state any other restrictions.

Do you have any reason for thinking otherwise?

Oh okay, I got it now. I missed what you were trying to get at with that example.