An excellent question from Josh on my Facebook page: “What do you see separating each act in the three-act structure? Is it enough that each act “feels” different (different location, different theme, different subplots at the forefront) and the transition itself is less important? Or is there a required storytelling milestone (PoNR, Dark Moment, etc.) that tells us one act has ended and another has begun?”
When I’m thinking about story structure and three-act structure, I don’t think about “differences” in act in terms of location, theme, subplots. Many stories take place in one location or have one or two themes, etc. But I know some authors do look at their acts that way.
For me, it’s the milestones/pillars (which I think is the more traditional way of looking at the three-act structure). So we’re talking about the Inciting Incident, the Point of No Return (PoNR), the Turning Points, the Dark Moment, and the Climax.
The Point of No Return signifies the beginning of Act II. Up until then, Act I is traditionally character introduction and plot setup. But by combining the Inciting Incident and the Point of No Return I tend to have a very short Act I and/or blur the line between Act I and Act II.
Act II is the part of the story where the “stakes are raised.” For the most part the situation gets worse and worse (although there can be some bright moments of “false success”.) This can happen in the same location, subplots can (but don’t have to be) explored, different themes can come out, etc. This act (if we’re talking about script writing is double the length of Act I and Act II) and if you want to be really structured, Act II can be divided into a miniature three acts as well.
Act II ends with the Dark Moment (which I will be blogging about soon). This is the moment where all seems lost. And we move into Act III, where the protagonist picks himself up and comes to a new realization about himself and his world.
In Act III everything comes together for a satisfactory climax and resolution. (Note: if you are writing horror or literature you don’t have to have a satisfactory ending. The readers of other genres, however, will want love to conquer all, good to win over evil, or justice to be served.)
This is my basic understanding of the three-act structure 
(and story structure in general). It is very script oriented and some novelist may have a different perspective on structure. For a deeper understanding of this I’ve been told to read Blake Snyder’s “Save the Cat”. It comes highly recommended and is on my “to be read” pile.
Tags: Blake Snyder, mythic structure, Save the Cat, three-act structure, writing