Definition and background:
Term applied to the mechanical workings of an instrument, typically of keyboard instruments. (1) mechanical device for transferring the forces produced elsewhere (on an instrument) to the parts that produce the sound (2) the mechanism on a harp which articulates with the foot pedals and shortens the effective vibrating length of the strings
The operation as a piano's keys and hammers against its strings. The complete mechanism which, when the piano keys are struck, causes the hammers to strike the strings of the instrument and provides for the dampening of the sound when the keys are released.
A term referring to the height of the strings above the frets and fretboard
For more information on the music term "Action" check out these other resources:
Wikipedia - Glossary of Musical Terminology
Virginia Tech Multimedia Music Dictionary
ORB -- Medieval Music Glossary