The acidity of a compound is determined by the stability of its conjugate base (ion).

1. Phenol: Dissociates to form the phenoxide ion. This ion is stabilized by resonance, where the negative charge on the oxygen atom is delocalized over the benzene ring involving the $\pi$-electron system. This delocalization disperses the charge, making the ion more stable (NCERT Class 11, Section 12.7.6 and Class 12, Unit 11).
2. Ethyl Alcohol: Dissociates to form the ethoxide ion. Here, the negative charge is localized on the oxygen atom. Furthermore, the ethyl group exerts a positive inductive effect (+I), which pushes electron density towards the already negative oxygen, thereby destabilizing the ion (NCERT Class 11, Section 12.7.5). Therefore, the delocalization of $\pi$-electrons in the phenoxide ion is the correct reason for its greater stability compared to the ethoxide ion.