the action refers to the speed with which the rod loads up. contrary to what jeremys states, a moderate action will shake like a willow (especially if paired with a light power). on the other end of the spectrum is the heavy rod with a xfast taper -> the tip will quickly load to the action of the rod - in this case heavy -> "small movement" of the tip and you are exceptionally fast at getting to the action.

rods with xfast or fast should be used for getting a hook quickly and solidly into the quarry -> ie jigs or other single hooks
rods with moderate action should be "softer" in order to not "pull the hooks" out of a fish.

also realize that rods with a more moderate action impart better "action" to the lure -> especially crankbaits and jerkbaits.

hope this helps