Action refers to the height of the strings over the fretboard. Having the Action of your guitar set appropriately is one of the single most important factors affecting the playability and tone of a guitar. There are two ways to know when the Action needs to be looked at. First, when it is hard to play the guitar. Specifically, when the strings just seem high and you have to press very hard on them. Second, when you hear buzzing when playing the guitar, especially at the higher frets. If you notice either of these the first thing you should do is check the neck to determine if the Truss Rod needs to be adjusted, see our article Adjusting the Truss Rod to learn how to do this. If you determine that the neck of the guitar is set correctly, then you probably need to adjust the Action of your guitar.