The term "action figure" was coined by the creators of the original G. I. Joe, to distance their product from the traditional idea that "dolls" as such were only for girls. The intents and purposes of such a toy were seen as for much more rugged play, and their design and accessories reflected this (with much simpler, coarse clothing and guns and knives instead of tea sets and bottles). Until the early 1970's action figures such as G. I. Joe, Johnny West, and Mego followed this format of hard plastic bodies, molded hair (with notable exceptions), and articulation points (joints) at wrist, elbow, shoulder, neck, waist, knee and ankle that put the action in action figure.
The oil crisis put an end to this style. The plastic that made up the bodies was a petroleum by-product, and the cost of making large figure, especially the foot tall Joes, became prohibitively expensive.
The concept of action figures was re-invented and re-vitalized in the late 1970's with the success of the Star Wars franchise. Hasbro came out with the first line of action figures in a smaller format (typically 3 and 3/4 inches high) and with fewer articulation points, at the neck, shoulder and legs. The first scuplts were simple and iconic, evolving with each new wave of figures over the years, until they reached the finely crafted likenesses of today. This smaller format allowed for many more characters to be made, were simpler to stand (if more limited to pose), and easier to store and carry. Many different toy lines were created along the same general format, including the new G.I. Joe line, which had retained most of the articulation points of the old Joes, losing only the ankle point.
Over the years the action figure has got taller, many lines producing figures 6 inches high, with each inch equalling a foot in scale. This allows for more accurate detailing and even texturing of molded sculpts of fabrics. While the likenesses, poseability, and even accessories of figures has improved, the "action" seems to have suffered, the durable playability lessened. For many of these figures I believe a new term should be applied: "action models".
But this does not seem to worry many hardcore collectors. To many the action figure is no longer a toy, but a collectible, or worse, an investment, not to be taken out of the box at all, for fear of damaging its' future value.
For myself, I can see their point of view. Ideally, and given enough money, I would like to buy three of each action figure I get: one to save for resale, one to preserve mint in box forever, and one to tear open and play with. Alas, money, storage space, and availability are not infinite. Having only one copy of an action figure I always opt to open it. For I believe that the true destiny of any toy is to be played with.