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ACT is the recording format of low-cost digital voice recorders: the pocket dictaphones, pen recorders and MP3 players with a record button that are sold under dozens of small brand names. The audio is compressed with G.729, a speech codec designed for telephone networks, at 8 kHz in mono. At roughly 8 kbit/s an hour of recording takes only a few megabytes, which is the whole point on a device with a small, cheap memory chip.
The trouble starts once the files leave the recorder. The format was never documented by the manufacturers, the Windows utility that shipped in the box is usually long gone, and mainstream players and audio editors do not recognise it. Software built on the FFmpeg libraries, such as VLC and mpv, can usually play an ACT file; almost everything else needs it converted first.
Conversion makes the recording usable, but it cannot make it better. G.729 keeps the frequencies that carry speech and discards the rest, so voices stay intelligible while music and background sound come out thin, and that ceiling carries into any format you choose. WAV is the convenient choice for editing or for feeding the audio to transcription software; MP3 is the one to pick for sharing and listening.
One name clash is worth knowing about. Adobe Photoshop also uses the .act extension, for colour tables: small palette files with no sound in them at all. Those are a different format entirely, and this converter reads only the voice recordings.