Implementing restful_authentication and wanted to make note of the minor gotchas along the way. I know at least some of these are in the documentation for the plugin, but nonetheless...
First, I installed mailtrap so I could see what was being sent by the app without doing any further configuration, or even using real email addresses.
sudo install mailtrap
mailtrap start
The default install was not sending the notification email. Some digging showed that although the observers are all there in the default code, they are not configured. So in environment.rb, add:
config.active_record.observers = :user_observer
The next issue is that the confirmation url sent has no route. Add to config/routes.rb:
map.connect '/activate/:activation_code', :controller => 'users', :action => 'activate'
Done!