The strong light matter interaction and the valley selective optical selection rules make monolayer (ML) MoS2 an exciting 2D material for fundamental physics and optoelectronics applications. But so far optical transition linewidths even at low temperature are typically as large as a few tens of meV and contain homogenous and inhomogeneous contributions. This prevented in-depth studies, in contrast to the better-characterized ML materials MoSe2 and WSe2. In this work we show that encapsulation of ML MoS2 in hexagonal boron nitride can efficiently suppress the inhomogeneous contribution to the exciton linewidth, as we measure in photoluminescence and reflectivity a FWHM down to 2 meV at T = 4K. This indicates that surface protection and substrate flatness are key ingredients for obtaining stable, high quality samples. Among the new possibilities offered by the well-defined optical transitions we measure the homogeneous broadening induced by the interaction with phonons in temperature dependent experiments. We uncover new information on spin and valley physics and present the rotation of valley coherence in applied magnetic fields perpendicular to the ML.