Last Seen is when they were last online (in any status).
Last activity is when they actually DO something on the system (make call, send an IM, etc).
It's necessary to know both pieces of information to see if someone is able to actually be at the PC/system to take a phone call. For example, my system has my last seen usually always updated, as Skype auto launches on ALL of my computers. However, when i'm not around, or watching a movie, for example, my last activity may be a few hours old. This let's my work team, for example, know that i'm not actively at my computer.