Animating is the process of moving the objects around in 3D space over time. To position an object in time you use what are commonly called key frames. These key frames specify a point in time where a specific value is stored. For instance you could have a ball on the left side of the screen at frame one and then one second later (1 second = 30 frames) the ball would be positioned on the right side of the screen. The first and last frames, 1 and 30, would be the key frames. The computer then calculates where the ball should be for the other 28 frames and moves the ball or object accordingly. This may sound easy but even making a ball bounce can create quite a few key frames. Now think of this process and apply it to everything that moves in a scene. It adds up very quickly!
Key frames, once created, can be manipulated in many ways. One way is to use the IPO editor shown in the top portion of the example image. The individual keys are represented by the white dots on the timeline. The keys shown in the example are the location keys for the X, Y and Z axis. The different color lines are the motion curves. Where the lines are flat there is no motion in that axis. Where the lines are angled or curved up or down there is motion in that axis. These curves allow one to see the speed with which the object is moving from key to key. A straight angled line from one key to another would represent straight motion at one speed. If the line from one key to another is curved it shows that the motion is either slower or faster going to/from the keys as that is how fast the value is changing. The action editor is similar but is mainly used for editing key frames for bones/armatures in Blender.
Some objects, like the screw drivers or the electric drill, are more complicated to animate than just moving them around the screen. These characters/objects make use of bones. Bones are a tool in many 3D applications that work and resemble the functionality of the bones in our own bodies. These bones make up skeletons or armatures as they are called in Blender. These skeletons are what deform our objects to make them bend and move around. Once setup correctly you can then move/rotate the individual bones and set key frames for each one of them to animate a character such as ED, the screw drivers or even more complex characters with arms, hands and feet.