Generally the rule for showing items on the activity stream of the dashboard is: show all items that are relevant to first tier items (e.g. if you are following a user, show all actions related to user), show top level actions for second tier items (e.g. if you are following a dataset, show actions related to resources added to that group or if you are following a group show items related to datasets) and third level actions should not be shown (e.g. showing resource updates for a dataset of a group that you are following)
From @johnmartin: