Wikipedia has a good intro. Basically, the benefits of Activity Theory is it combines all system levels into one model of change - from individual through to policy. And I like that.
Greg, Entwistle and Beech have a new paper which considers how AT can be applied usefully in healthcare.
Soc Sci Med. 2012 Feb;74(3):305-12. Epub 2011 Mar 1.
Addressing complex healthcare problems in diverse settings: Insights from activity theory.
This is their abstract: "In the UK, approaches to policy implementation, service improvement and quality assurance treat policy, management and clinical care as separate, hierarchical domains. They are often based on the central knowledge transfer (KT) theory idea that best practice solutions to complex problems can be identified and 'rolled out' across organisations. When the designated 'best practice' is not implemented, this is interpreted as local - particularly management - failure. Remedial actions include reiterating policy aims and tightening performance management of solution implementation, frequently to no avail. We propose activity theory (AT) as an alternative approach to identifying and understanding the challenges of addressing complex healthcare problems across diverse settings. AT challenges the KT conceptual separations between levels of policy, management and clinical care. It does not regard knowledge and practice as separable, and does not understand them in the commodified way that has typified some versions of KT theory. Instead, AT focuses on "objects of activity" which can be contested. It sees new practice as emerging from contradiction and understands knowledge and practice as fundamentally entwined, not separate. From an AT perspective, there can be no single best practice. The contributions of AT are that it enables us to understand the dynamics of knowledge-practice in activities rather than between levels. It shows how efforts to reduce variation from best practice may paradoxically remove a key source of practice improvement. After explaining the principles of AT we illustrate its explanatory potential through an ethnographic study of primary healthcare teams responding to a policy aim of reducing inappropriate hospital admissions of older people by the 'best practice' of rapid response teams."