From Diablo Wiki
Like Diablo II, Diablo III is divided into four Acts. These acts are sections of the game and story, much like those that divide a play. Each Act tells a discrete story and takes place in a single location, with events building up to one final battle against a very powerful boss monster.
See the individual Acts pages for much more detail about what each of Diablo III's acts contain.
In October 2010 a fan asked if Act Four would be a shorter act than the others, as was the case in Diablo II. Bashiok's reply confirms that it will, and adds additional story information. 
- Pretty much.
- We looked at act length in Diablo II and came to some of the same conclusions, “They ran out of time”. But when considering it further the intent of the act structure actually got shorter as you went, intentionally rocketing you toward the end of the game. It’s one of those things that makes game design hard to relate. It’s... it’s sort of like a movie score. If done right emotional music can make a scene feel ‘better’ or raise whatever emotion is being portrayed, but if you start scrutinizing the individual components, or just lose the immersion, it can come off as cheesy.
- In any case I think we’re estimating a longer game than Diablo II right now, regardless of actual comparable act size.
Act I takes place in and around (and beneath) Tristram, and Act II is in the desert around Caldeum. Both those acts clearly parallel Diablo II's first acts. Act III in D3 will apparently be in the frozen northern Barbarian lands; a very different setting than the steamy jungle of D2's third act, but since we know that D3's Act III will involve fighting off a huge demonic invasion, it seems reasonable to speculate that Act IV will be set in the Burning Hells (as it was in Diablo 2) with the player taking the battle to the source.
That's just speculation though, since nothing concrete is yet known about Act IV.