Many people are surprised when they first hear about the "three act structure," and its use in Hollywood films, because it is hard to believe. But, in fact, nearly every Hollywood movie conforms to this simple design. Once you have a thorough understanding of how the three act structure works, you'll be able to predict the plot of most genre movies that come out of Hollywood, whether its a blockbusting action film or a feel-good romantic comedy. Let's take a look at how it works, with the comedy "Dodgeball" as an example.
In the first act, we meet the main character. This character is always flawed, but there is usually a "pet the cat" moment--something sweet the character does, which demonstrates what she will later become. In Dodgeball, Peter is lazy and sarcastic, but he takes care of the oddballs who frequent his gym. The whole point of the first act is to establish the world where the character lives, and what it is that the character wants (in Peter's case, to be left alone). The first act ends with the "threshold," when the character answers her call to action and sets off on the film's adventure. In Dodgeball, this is when Average Joe's is threatened, and Peter decided to enter the tournament.
The second act is actually divided into two parts. In the first part, the protagonist is working toward her goal, which she will usually achieve at the midpoint. It's only after that, during the second part, that she realizes that goal wasn't what she wanted at all. Usually, the first and second parts of the second act are opposites of one another. In comedies, everything will go wrong in the first part, and right in the second; in tragedies, everything will go right in the first, and horribly wrong in the second. In Dodgeball, the first part is when they are training, and lose to the girl scouts. The second part is when they start to win games in the tournament.
The second act ends with the "belly of the whale," at which point the protagonist has driven away all of her allies and there seems to be no solution to her problems. This is when Peter is sitting at the airport bar, alone, drinking while his team plays. Usually, there is also a "moment of death," where the audience is allowed to believe, even if only for a moment, that the protagonist has died. Sometimes, though, it is something as small and subtle as setting the pivotal scene in a cemetery, or else the mentor character will be the one who dies. In Dodgeball, this moment is when Kate takes the hit for Peter in the final game.
The third act is also known as the resolution. To transition from the belly of the whale, there is often a pep talk from another character--usually the mentor--during which the other character openly identifies the protagonist's major flaw. Renewed by this knowledge, the protagonist formulates a plan to get everyone back together again, defeat the bad guy, win back her love, etc. In the end, she will have to give up her original goal, but will achieve her new one. Peter gets his pep talk from Lance Armstrong, who happens by him in the airport.
The resolution often ends with a denouement, which is essentially the "happily ever after." It shows the audience what happened to everybody, gives some sense of what the future will be like for these characters, and wraps up any outstanding plot points. Dodgeball does this masterfully, with the final reveal about Peter's bet on Average Joe's to win, and his takeover of Globogym.
A keen understanding of the three act structure can make you practically psychic at the movie theater. Practice identifying these moments in your favorite films, and you'll be a screenplay expert in no time.