Photo effects can be defined as any kind of effect that is applied to a photograph. They can be as simple as placing a filter over the lens of a camera, to as extensive as total manipulation that changes the photo to something that it never was in real life.
While the ease of changing a photo has become much simpler in the modern era of digital imaging and with products such as Adobe Photoshop, the fact is that photo effects have been being applied to photographs since the early days of film cameras. Even in the pre-digital age, the use of manipulation was fairly wide ranging from the subtle use of dodging and burning as done by Ansel Adams, to the flagrant falsifying of images by Elise Wright and Frances Griffiths and the Cottingley Fairies in 1917 that fooled the Sir Arthur Conan Doyle.
Photo effects are done to improve the image in one way or an other; either to make it in to a more pleasant vision of what the photographer was really trying to capture, or to make it more desirable to the person that is viewing the image, such as in the case of the high fashion industry. As the digital market matures, photo effects will continue to develop in new and even more interesting ways.