Parmenides had an argument that change is impossible. For something to change, what is not must somehow be — the tree must be waiting somewhere for the seed to become it — and there is no coherent way to say that.

Aristotle's answer is one distinction, and it is probably the most productive single move in the history of metaphysics.

The seed is not a tree. It is also not nothing-with-respect-to-trees, the way a stone is. It is a tree potentially, and becoming one is that potential being made actual.

Parmenides' dilemma assumed only two states: being, and flat nothingness. Aristotle's claim is that there is a third thing, and it is perfectly real — the capacity of this thing, as it actually is, to become something else.

Why potency is not a weak kind of actuality

The distinction is easy to get wrong in a way that makes it useless.

A potential is not a faint or partial presence of the outcome. The tree is not hiding in the seed in miniature, and the statue is not dimly present in the marble. If it were, the account would collapse back into rearrangement and nothing would really become anything.

A potential is a capacity grounded in what the thing actually is. The seed can become a tree because of what a seed actually is — its structure and composition — and a stone cannot, because of what a stone actually is. So potency is always specific, always owned by something actual, and always limited by it. This is why it is not a way of smuggling in what-is-not: the potential belongs to the actual thing, and its existence is the thing's existence.

That also gives the distinction teeth, because it makes potential claims false-able. A capacity that is not grounded in anything a thing actually is now is not a potential; it is a wish.

What it explains

Change, as above, and with it the possibility of a natural science at all. If change were incoherent there would be nothing to study.

Causation. What moves a potential to actuality must itself be actual — you cannot be warmed by something merely potentially hot. So every change requires something already actual to bring it about, and that principle is the engine of the cosmological argument and of Aquinas's first way.

Teleology. A potential is always a potential for something specific, which is how a directedness gets into nature without anyone intending it. An acorn's potential is for an oak, not for an arbitrary outcome, and that is the final cause doing its work.

Form and matter. Matter is what a thing is potentially, form is what it is actually, and the pair is the same distinction applied to composition rather than to time.

Where it becomes theology

If every potential must be actualised by something already actual, the regress has to end somewhere, and it ends in something with no potentiality at all — pure act, which actualises without itself being actualised.

That is what classical theism means by God, and it is not an extra claim bolted on. It is this distinction pushed to its limit, and it is why divine simplicity follows so directly: anything with potentiality could be otherwise, could be acted upon, and would depend on whatever actualised it. Pure act is the only thing that could stop the regress.

Avicenna and Aquinas both build their central arguments on exactly this, and it is the reason a dispute about seeds and trees ends up doing duty in an argument about God.

What happened to it

Early modern science abandoned the vocabulary. Explaining why opium causes sleep by its dormitive potency became the standing joke about scholastic explanation, and the mechanical philosophy replaced capacities with matter in motion.

It has come back, quietly. Dispositional properties are respectable again — fragility, solubility, charge — and a disposition is a potential with a modern name. The question of whether these are real features of things or just summaries of what would happen under certain conditions is live, and it is recognizably the argument over whether potency is something in the world or a way of talking about actuals.