It indicates that the attacker's attention is divided. It might be that they have less time to attack, but it could also be that while they are attacking they are also doing something else (e.g. engaged with the target and also using their shield to block missile attacks). Activity is not necessarily time, if it was it would be expressed as seconds and not as a percentage.
You're correct that, if you only spend 50% activity on an attack, the attack is at -50. If you spend 80% activity on the attack, it's at -20.
There is also a minimum amount of activity you can spend to make an attack. In RMU, that minimum is 50%. You can't make a 20% attack at all. In RMSS, the minimum is 60%.