Activity diagrams show the flow and sequence of activities in a system by depicting actions, decisions, and parallel processes through graphical symbols like activities, transitions, decisions, and swimlanes. They are used to model workflows, use cases, and complex methods by defining activities, states, objects, responsibilities, and connections between elements. Guidelines are provided for creating activity diagrams, such as identifying the workflow objective, pre/post-conditions, activities, states, objects, responsibilities, and evaluating for concurrency.