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Its real easy - download pwnage. Open it (from either windows or mac, whichever you are using), open the 1.1.4 firmware file (available all over the net - you can get it right from Apple), connect iPhone via USB, click iPwner, let it do its thing, then click IPSW Builder, create a custom one to your liking (I'll assume you are on AT&T or whatever your official carrier is, so do not pick any of the unlock options), under the bundles tab add all of them, then build the IPSW. Open up iTunes, find your iPhone on the sidebar, then in the iPhone menu option-click (mac) or shift-click (windows) the restore button. Find the IPSW you just made, and let it do its magic. Voila! You have a jailbroken phone with installer (and a few other handy apps)

Well, in these days, jailbreaking always includes installer.app.

 

The difference between just jailbreaking and jailbreaking and activating (if you mean so) is that:

 

AT&T users already have their iPhone activated with AT&T and their real tokens, so they just add Installer.

If you are no an AT&T customer, then your iPhone is not activated, so you will have to get a Token that is shared

by all the users that activate with that app.

 

So in fast terms:

 

activate and jailbreak: for non AT&T users so you get a generic token.

jailbreak only: for AT&T users, so you use YOUR custom activation token.

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