The significance of the theory of plate tectonics in geology lies in its explanation of Earth's surface dynamics, including the formation of mountains, earthquakes, and volcanic activity. This theory posits that the Earth's crust is divided into several large plates that float on the semi-fluid asthenosphere. The movement of these plates is driven by convection currents in the mantle, resulting in various geological phenomena and influencing the distribution of continents and oceans over geological time.