The theme files need to be uploaded before you can activate the theme for use. There are two ways you can do this, FTP upload or WordPress upload.
If you are uploading via FTP upload, then you need to upload the unzipped folder “Krakatau” to the /wp-content/themes folder of your WordPress installation.
If you are uploading via WordPress upload, then navigate within the WordPress admin area to Appearance > Add New Themes > Upload. Select the zipped file “Krakatau.zip” and then hit Install Now.