Observe that the reaction has occurred in the test tube containing iron nail and copper sulphate solution. Iron takes the sulphate away from copper. You see that a reaction takes place and copper is left by itself. Now, we can say that iron has displaced copper from copper sulphate.Copper sulphate $+$ Iron$---------$ Iron sulphate $+$ CopperIn such a reaction, the less reactive metal displaces the more reactive metal. Thus, the activity shows that iron is less reactive than copper.