Activation is making a phone active on a cell phone network. It is the process that links a specific cell phone to a specific customer account and phone number.
It requires configuration on the network side, for the network to recognize that specific phone as belonging to that customer.
It may also require configuration on the phone itself. This may be automated to some extent, or it may require following special instructions to enter specific codes into menus that are normally hidden.
Activating a phone is generally specific to CDMA phones. GSM phones do not need to be activated.