Artificial neural networks mimic the human brain by using interconnected layers of neurons that fire electrical signals between each other. Activation functions are important for neural networks to learn complex patterns by introducing non-linearity. Without activation functions, neural networks would be limited to linear regression. Common activation functions include sigmoid, tanh, ReLU, and LeakyReLU, with ReLU and LeakyReLU helping to address issues like vanishing gradients that can occur with sigmoid and tanh functions.