Put simply, all stories have 3 acts: the beginning (act 1), the middle (act 2), and the end (act 3). You could argue this point, but you would be wrong, and we would just be wasting time. Moving on.
ACT 1 - The Beginning/The Setup
Act one sets up the world, the main conflict, and sets what is at stake.
Example: It is a cold December night, and Pete wakes from his slumber with the overwhelming need to pee. He must now decide whether to navigate the cold, cluttered floor, or wet his bed.
In this example, we've established the world (cold night, cluttered floor), we've established the conflict (Pete must pee), and we've established what is at stake (Pete's continued rest, and whether the bed remains dry).
ACT 2 - The Middle/The Journey
Act two is where are hero braves the world of the story, facing obsticles whose solutions supply him with abilities that he will use to overcome the main conflict. Obstacles help to supply our hero with the knowledge of what he is lacking. Through overcoming these obstacles he fills in the gaps of his abilities and becomes stronger.
Example: Confronted with the cold, dark, debris-littered floor, Pete turns on a night-light and dons his fuzzy bunny slippers.
In this act, we've placed the obstacles (the dark, the debris, and the cold), and our hero was forced to find solutions to these problems (the night-light and slippers). With these solutions, he is now ready to face the final challenge.
ACT 3 - The End/ Climax and Resolution
Act three is where it all comes to a head, where the hero must use what he has acquired on the journey and overcome the main conflict to restore the world to order.
Example: Having overcome the dangers of the floor, Pete is confronted with the final challenge: the icy tile floor of the bathroom. Utilizing his slippers, and assisting his aim with the night-light, Pete overcomes his need to pee by successfully using the restroom, and returns triumphantly to his bed.
We've returned to the main conflict (having to pee) and our hero has overcome it with the tools found on his journey. With the world restored to order, the story has reached its resolution.