In Fantasy Grounds, an effect is anything which gives the character either a bonus or penalty of some kind to a dice roll they are about to make. In order for the effect to be properly executed the character must be on the Combat Tracker (CT) and either they or another actor must make a dice roll which involves the character. In other words effects are checked when a character attacks, does damage, or makes a skill check. Some effects are created automatically by the player consuming a consumable or the GM adding an NPC to the tracker.
Creating effects can be done by the GM by clicking on the effects button on the combat tracker. From there, you will enter in the text for the effect. Case is very important with effects and may not get the desired effect if the proper case is not used.