Actions are packages of any type of animation, such as function curves, expressions, constraints, and linked parameters. After you create an action, you load it as a clip in the animation mixer, where you can modify the animation in a nonlinear and non-destructive way.
This package in the animation mixer allows you to work at a higher level of animation that is not restricted by time: you can move an action around anywhere in time, squeeze or stretch its length as you like, apply one action after another in sequences, and mix two or more actions together to create a new animation.
You can create an entire library of actions, like walk cycles or jumps, and use them as many times as you like in a scene, or share them among any number of models.
You can also create compound actions that are "containers" for multiple actions, including animation from different sources (function curves, expressions, constraints, and linked parameters). Working with complex animation data becomes a simpler task than dealing with multiple fcurves.
Because actions package animation data into a single usable unit, it makes it easy to copy animation from one model to another, even if the model doesn't share the same hierarchy, scale, or naming conventions. When there are differences between the models, a template opens to help you map the corresponding model elements.
Actions let you combine animation from different sources, acting like a container or package. When a parameter is driven by a clip at a given frame, the animation values determined by the mixer take precedence over any other type of animation. The mixer reads from and writes to a virtual region above any existing fcurves or expressions at the scene level, but below any constraints at the scene level.
Basically, action clips override any other animation for the object at that frame. You can, however, have fcurves on an object (at the scene level) and mix them with an action clip over the same frames. For information on this, see Mixing Fcurves with Action Clips.
If there is no animation on the object between clips, the animation value of the last frame of the last clip remains active until the next clip.
Between clips, the parameter is driven by whatever animation is going on in the "background." Even on frames where a parameter is driven by an action, you can still adjust values and set keys to define the background animation. You can also use a fill action to set the background animation — see Filling the Gaps between Action Clips.
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