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Depends on the firm. Some places it is Siberia for attorneys for whom the firm feels like partnership is unlikely. For some it is a genuine stepping stone.
At some firms, Counsel/Of Counsel are former equity partners who are working significantly less and have a nice fee arrangement. Of Counsel is rarely used outside of the retired partner context. At other firms, Counsel is a stepping stone between associate and equity partner (e.g., Skadden). At another set, it's a stepping stone between associate and nonequity partner. At both shops, generally they'll be happy to let you sit at counsel forever if you bill enough but they just don't quite see you as partner material.
BigLaw counsel are often good to very good attorneys who don’t (or don’t yet) have a book of business. If they sucked at the whole lawyer thing, the firm would’ve asked them to leave. If they had a book of business, they would’ve made partner or lateraled somewhere else to make partner.