There are two separate clauses:
- Kion vi faras = what you are doing, what you do - this is a headless relative clause meaning something like "The thing that you do" (La ago, kion vi faras)
- estas grava - (it) is important
Each of the two clauses needs a main verb. So you have "faras" in the one clause and "estas" in the other.
You can see that in English you also have two conjugated verbs. It's even clearer if you changed it to "What he does is important" because in the "he, she, it" form you can most easily see the difference between infinitive and conjugated form. There is an -s form "does" in the one clause and another -s form "is" in the other one.
It is not "What you make be important" with infinitive "be", which is what "Kion vi faras esti grava" might mean -- i.e. something like "the thing which you work on so that it becomes important".
That is also possible, and is the full form. It would correspond to an English sentence "That which you do is important."
But the "Tio" can be omitted if no ambiguity results: http://bertilow.com/pmeg/gramatiko/subfrazoj/rilataj/ti-forlaso.html
Good point - this probably falls under http://bertilow.com/pmeg/gramatiko/subfrazoj/rilataj/ti-forlaso.html#i-pho , which prohibits dropping the TI- word if the TI- and KI- have different cases, as in this sentence (Tio estas: nominative; kion vi faras: accusative).
PMEG says that this particular rule is not always observed, and that if one does not follow it one must take care that no ambiguity results (and I think there is none here) but it is probably better style to follow the rule.