This feature is a part of Custom Product Order. Click here to see all Custom Product Order features.
In Catalog Settings > Inventory you can enable the Sort by inventory option:
Once enabled the Sort by Inventory option will be the default one on all catalog pages except on the search results.
When you sort products by inventory you will see the available products on the top of the list.
The sort by availability option is available inside the sorting drop-down so the user can change the sorting type:
