In Svelte, an action is a function that runs when an element is created. This function can return an object with lifecycle methods like update and destroy, and also a data property. The data property contains information the component can use to update its UI or state. When the action initializes, it returns this object, and the component reads the data. If the action's update method is called with new data, the component can react and update accordingly. Finally, when the action is destroyed, it cleans up and stops providing data. This flow helps components interact with DOM elements and external logic in a clean way.