Alex Epstein has posted some interesting thoughts on the three-act structure. This is something I’ve thought about a fair amount, so I thought I’d weigh in.
First, for those of you who aren’t screenwriters, this post is going to be a brief overview of the three act structure. I’m going to take my examples from the original Star Wars (or “Star Wars: Episode IV: A New Hope,” for my fellow geeks). If you are one of the nine sentient beings on the planet who has yet to see the film, spoilers follow. There is also a spoiler for Raiders of the Lost Ark.

I’m picking Star Wars because I figure everybody has seen it, but I could have used any one of thousands of other examples. About 90% of all mainstream movies–and about 98% of all good ones–fit broadly into a three act structure, where the acts can be defined as follows:
ACT I: An introduction to the normal life of the protagonist (Luke Skywalker is a bored moisture farmer on a desert planet), as well as the world of the movie (Out in space, a battle is raging between a ragtag bunch of rebels and an evil empire). And then, into this world, comes…
THE FIRST ACT BREAK (also known ” the “first plot point,” the “act out,” or many other terms. (It is NOT known as the inciting incident, which, embarrasssingly, is what I called it in the first draft of this article. Thanks to Brandon for catching the error.)) Whatever you call it, this plot point is something that dramatically changes the daily life of the character. (After two strange droids arrive, Luke’s aunt and uncle are brutally murdered.) I call this the Manishtana Moment, from part of a Hebrew phrase from the Passover seder which translates as “Why is this night different from all other nights?” The first act break answers this important question, and it also gives the character…
A CONCRETE GOAL IN SERVICE OF A LARGER GOAL: Thanks to the first act plot point, our protagonist decides to (or is given the chance to, or is forced to) pursue some concrete physical goal (help Princess Lea get the Deathstar plans to the Rebel alliance) in order to pursue some larger, more abstract goal (strike a blow against the Empire). And once our hero has taken on his concrete goal, we are into:
ACT II, where our protagonist actively pursues his goal despite a series of increasingly challenging obstacles. Interestingly, lthough most moviegoers aren’t conscious of the three-act structure, Act II is what they’ll talk about if you ask them what the movie is about. In other words, nobody ever says “Star Wars is about this moisture farmer on a dull desert planet.” Act II will build to…
THE SECOND PLOT POINT. This is a moment that takes the story in some new direction. The most common second plot points are:

–The hero achieves his concrete goal (Luke succeeds in getting the plans to the Rebel Alliance) but realizes he still must take further steps to achieve the larger goal (Luke must use the plans to blow up the Death Star.)
–The hero fails to achieve his concrete goal ( Indiana Jones fails to keep the Lost Ark of the Covenant out of the hands of the Nazis) and now must somehow still achieve his larger goal (Indie must stop the Nazis from using the Ark to win the war.)
-The hero reaches a crisis point where he is as far away from achieving his concrete goal as he could possibly be, and all seems lost.

The second plot point closes Act II, and we then move to…
3. ACT III, in which we zip through the climax and the denoument, and tie up any loose ends.
As a rough, general rule of thumb, Act I generally takes up 25% of the running time; Act II takes up 50%; and Act III takes up the remaining 25%.
So that’s the whatof the three-act structure. Next up: a discussion of why.