Your critical heals reduce physical damage taken by 5/10% for 15 sec, and heals you cast increase allies' maximum health by 5/10% of the amount healed, up to a maximum of 10% of their health.
Ancestral Healing is a Shamantalent in the Restoration tree. It causes your critical heals to reduce the physical damage taken by the target healed for 15 seconds. It does not stack with the holy priest's third tier talent [Inspiration].
Since the talent's damage reduction buff is based on critical heals, anything that increases your critical chance will increase the uptime of the buff. The talent [Acuity] can thus be useful, although the critical effect chance you get from intellect alone is usually enough to ensure a very high uptime at higher levels. The talent is highly inconsistent in what types of critical effects trigger it. It is not triggered by [Earth Shield], Earthliving or [Healing Stream Totem], but can be triggered by [Healing Rain] and the periodic healing of [Riptide]. All direct healing spells can trigger the effect, including every jump of [Chain Heal].
Tips and tactics
Simply keeping Riptide active on a tank will provide high uptime of Ancestral Fortitude, significantly reducing physical damage taken.
Since the buff can be dispelled, many PvP builds spend one point in Ancestral Healing just to use it as a dispel buffer for more important buffs like [Bloodlust] or Earth Shield.
Trivia
Ancestral Healing is a basic Shaman spell in Hearthstone. The flavor text reads: "I personally prefer some non-ancestral right-the-heck-now healing, but maybe that is just me."
Patch 4.3.0(2011-11-29): Now also causes the shaman's heals to increase the target's maximum health by 5/10% of the amount healed, up to a maximum of 10% of the target's maximum health, for 15 seconds. This effect does not stack if multiple Restoration shaman are present, and does not apply to heals from procs.
Patch 4.0.1(2010-10-12): Down from 3 to 2 ranks. Moved from tier 2 to tier 3.
Patch 3.2.0(2009-08-04): The buff from this ability now reduces the physical damage taken by the target by 3/7/10% instead of increasing the target's armor.
[Inspiration].
[Acuity] can thus be useful, although the critical effect chance you get from intellect alone is usually enough to ensure a very high uptime at higher levels. The talent is highly inconsistent in what types of critical effects trigger it. It is not triggered by 
[Earth Shield], Earthliving or 
[Healing Stream Totem], but can be triggered by 
[Healing Rain] and the periodic healing of 
[Riptide]. All direct healing spells can trigger the effect, including every jump of 
[Chain Heal].
[Bloodlust] or Earth Shield.
