Am I right in thinking that 'New Activities' is primariliy for those who require more than one desktop. For exampe, a specialist desktop for work, and another for recreational activities?

Activities are a concept which allow you to organise files, running applications and the contents of your desktop (in terms of layout and applets present). You can apply them in whichever way suits your personal workflow. Please be aware that file organisation may not be currently functional depending on the version of KDE you are using.