The Activity Timeline exists at the bottom of every one of your records. The purpose of it is to allow you to go backwards in time to see what has happened with that record.
For example it allows other members of your team to see what has been done with an Opportunity to push it through your sales pipeline so as to avoid duplicating work and seeing what needs to be done. You can also see notes left by other team members that might be helpful to you, as well as events which RealtimeCRM automatically adds to it that it considers important such as when a new line item is added to an Opportunity.
The purpose is to provide an easy way to see what has happened so you can plan what to do next.
An example Activity Timeline for an Opportunity record