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An action is basically a series of instructions that you can save in Photoshop so they will run automatically. As a photographer, I use them a lot to resize images -- so I will save the series of steps that I always need to do (e.g., open the photo, change the image size, save it in a certain place) as an action. Then I just run the action on a whole bunch of files.
A lot of people use actions to automatically run the steps needed to convert a photo from color to black and white. There are tons of other actions that will give all sorts of effects -- chalked edges, metallic effects etc -- but they are all really the same thing, a series of steps saved in Photoshop. They are so wonderful because they are tremendous time savers.
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