An action hook is simply a queue point that acts at a specific point in the PHP execution process: callbacks are queued via add_action() call, and everything in the queue gets processed in turn:
add_action( 'hook_name', 'callback_name', $priority, $number_of_args );
A filter hook is a similar queue point, only it acts on a specific bit of data – it could be a string, an array, an integer, or whatever. As with actions, callbacks are queued via add_filter() call, and everything in the queue gets processed in turn.
add_filter( 'hook_name', 'callback_name', $priority, $number_of_args );
If you need to ensure that one callback gets processed earlier or later than another, then you will need to ensure that the two callbacks have different priorities. The lower the number, the higher the priority, and the earlier the execution. The default priority is 10, so anything added with a priority of 11 will execute after the default, and anything added with a priority of 9 will execute before the default.
So, yes: both the Theme and Plugins can add action or filter callbacks to the same action/filter hook, without conflict.