Learn Russian: Что вы делали вчера? - What were you plural or formal doing yesterday?

Because we are asking about the process of what someone was doing, not asking if they successfully finished a specific task. When you ask an open, general question about how someone spent their time, you use the imperfective aspect.

Why does the verb end in -ли?

In the Russian past tense, verbs change their endings based on gender and number. Because the subject is вы (which is plural, or formal singular), the verb takes the plural past tense ending -ли.

I noticed Что is pronounced with an 'sh' sound instead of 'ch'. Is that normal?

Yes! This is a very important exception to remember. Even though it is spelled with Ч (which usually makes a 'ch' sound), the word Что is always pronounced like 'shto'.

Could I change the word order and say Что вчера вы делали?

Yes, Russian word order is very flexible! However, Что вы делали вчера? is the most natural, standard way to ask this. Putting вчера at the end makes it sound smooth and conversational.