Three Act Structure
The three act story structure has been described, and analysed, and argued about since Aristotle, who posited that a whole story has a beginning, a middle, and an end. Although this might seem obvious to the point of absurdity, the very longevity of the idea should keep good writers from dismissing it out of hand.
The three parts, or "acts" of this structure have been given many different names, such as:
Beginning, Middle, End
Set-up, Confrontation, Resolution
Incitement, Setback, Climax
Crucible, Complication, Conclusion
Regardless of what they are called, however, each part of the structure serves a distinct function that moves the story forward and connects the pieces into a cohesive whole.
ACT 1: BEGINNING
The first act makes up approximately the first quarter of the narrative and acts as an orientation to the story. It establishes the genre and tone of the narrative, introduces the main character and the world of the story, and gives context for the meaning of the story as a whole.
By the end of Act 1, the reader should know enough about the main character to form an empathetic attachment. That doesn't mean the reader must necessarily like the main character, only that the reader must care what happens to the character and be curious enough to keep reading. This is often accomplished by revealing the character's existing relationships, personal strengths and weaknesses, deepest desires, greatest fears, and most urgent needs (conscious or unconscious).
The forces of opposition should also be introduced, either overtly or covertly, before the end of Act 1.
Act one is also where the stakes of the story are established. What does the story world or the main character have to gain or lose in the process of passing through the ordeal of the story? A common technique is to show what is already happening in the main character's life when the story begins. This gives an idea of what the character would have been doing if the story never happened so that the reader is able to appreciate the impact the changes brought by the story will have in the main character's life. This allows the reader to begin to root for or against the changes and to feel invested in the outcome of the story.
Act 1 ends with an event, decision, or realization that changes everything. It might be cataclysmic, or it might be subtle, but either way, nothing will ever be the same again after it happens. This is called the Inciting Incident.
ACT 2: MIDDLE
The second act is typically the longest act in a story, comprising about half of the narrative. In it, the main character reacts to the Inciting incident. There is no going back, only forward. In the process, the character encounters obstacles, gathers allies, and faces enemies. More is revealed about the character's backstory, goals, needs, and motivations. Complications crop up. The stakes rise. Drama builds. The tension increases to the breaking point.
Act 2 ends with an event, realization, or decision that changes the direction of the narrative once more. This might be a false triumph or a crashing defeat. It might be obvious, or it might be inconspicuous. Whatever form it takes, it changes the character in a way that leads inevitably toward the final confrontation that will end either in ultimate triumph or inescapable defeat. Not only is there no way to go back, there is now no way to move forward except by facing the oppositional forces head-on.
ACT 3: END
In Act 3, which makes up the remaining quarter of the narrative, the tension reaches the breaking point. The main character confronts the forces of opposition and either triumphs decisively at last or is completely and irrevocably defeated. The effects of the final outcome of this confrontation--the changes wrought by the story--are then shown to the reader, and the story comes to a close.