Why fragments, and when to use fragments instead of activities?

In short, fragments live inside activities, and each activity can host many fragments. Like activities, they have a specific lifecycle, unlike activities, they are not top-level application components.

• Advantages of fragments include code reuse and modularity (e.g., using the same list view in many activities), including the ability to build multi-pane interfaces (mostly useful on tablets). A fragment can be used in multiple activities. By making each screen a separate Fragment, this data passing headache is completely avoided. Fragments always exist within the context of a given Activity and can always access that Activity. By storing the information of interest within the Activity, the Fragment for each screen can simply access the object reference through the Activity.
• The main disadvantage is (some) added complexity. You can generally achieve the same thing with (custom) views in a non-standard and less robust way.